Moody’s Analytics said in its Weekly Asia Pacific Economic Preview that the Philippine economy is expected to slow to 5.7% year-on-year in the September quarter from 6.3% in the June quarter because of internal and external pressures.
The report said private consumption was muted in the previous quarter as the Monetary Board’s decision to cut policy rates would take time to filter through the economy. However, Moody’s Analytics said government spending and private sector investments would drive growth during the month.
“Exports could lose some shine due to soft external demand for Philippine goods and a slower increase in international tourist arrivals,” the report added.
The Monetary Board reduced the Bangko Sentral ng Pilipinas’ (BSP) Target Reverse Repurchase (RRP) Rate by 25 basis points to 6.25%. Accordingly, the interest rates on the overnight deposit and lending facilities were adjusted to 5.75% and 6.75%, respectively.
Over 6% growth
The Moody’s Analytics report is consistent with earlier estimates by the Marcos administration, targeting above 6% growth this year and 2025.
In his economic and market outlook, BPI senior vice president and lead economist Emilio Neri Jr. said economic growth will likely hit 6.1% this year and further accelerate to 6.3% in 2025.
“The Philippine economy has been resilient despite significant headwinds like severe El Niño and devastating typhoons, still managing to grow by 6% in the first half of 2024,” Neri said.
“Looking ahead, the Philippine economy will likely continue to outperform in the region, supported by its strong consumer base,” he added.
IMF projection
In a separate report, the International Monetary Fund (IMF) said the Philippine economy could grow by over 6% in 2029, making it one of the fastest-growing economies in emerging and developing Asia.
In its World Economic Outlook October 2024 update, the IMF forecasts Philippine economic growth to settle at 6.3% in 2029.
The projected economic expansion is the third highest, next to the economic growth forecast for Bhutan at 7.2% and Bangladesh and India at 6.5%.
For 2024 and 2025, the Philippine economic growth projection was maintained at 5.8% and 6.1%, respectively.
Young workforce
An independent report by HSBC Global Research said that the Philippine economy is projected to maintain steady growth because of its young workforce and two decades of sound fiscal reforms.
“We believe the Philippines is set for takeoff, with the country’s hardworking people as its main source of growth,” Aris Dacanay, economist at HSBC Global Research, said.
The report indicated that the country’s working-age population will peak in 2035, the last among the Association of Southeast Asian Nations (ASEAN) members, giving the country a distinct advantage for a longer period.
“This demographic dividend should, in turn, boost [gross domestic product] per capita and increase the absolute savings available for further investment. From now until 2029, we expect average incremental savings in the economy to increase by $17.7 billion yearly,” Dacanay said.
According to government data, gross national savings amounted to P6.6tln based on 2023 prices. This was an increase of 35% from P4.89tln in 2022, as savings from households and the government bounced back from three straight years of contraction.