The World Bank expects Philippine economic growth to accelerate to 5.8% for both 2024 and 2025, up from an estimated growth of 5.6% in 2023.
The forecast for the Philippines for this year is the highest in Southeast Asia, along with Cambodia which is also projected to record a 5.8% growth this year, according to the World Bank in its January 2024 Global Economic Prospects report.
However, the World Bank’s prediction of 5.8% growth for the Philippines in 2024 is lower than the government’s target of 6.5% to 7.5% growth.
World Bank forecast of 5.6% economic growth in 2023 is also below the government’s target of 6% to 7%.
The financial institution earlier said the services sector is expected to be the main growth driver for the country this year, supported by the ongoing recovery of the tourism sector and the consistent performance of the information technology and business process outsourcing industry.
In East Asia and the Pacific, the World Bank foresees growth to decelerate to 4.5% in 2024 and to 4.4% in 2025 from an estimated 5.1% in 2023, largely reflecting slower growth in China.
Excluding China, growth in the region is projected to strengthen modestly, reaching a solid 4.7% in both 2024 and 2025.
Among the Philippines’ Southeast Asian peers, projected growth rates for 2024 are 5.5% for Vietnam, 4.9% for Indonesia, 4.3% for Malaysia, 4.1% for Laos, 3.2% for Thailand and 2% for Myanmar.
In East Asia and the Pacific excluding China, solid domestic demand, particularly private consumption, is expected to be the main driver of growth. Modest inflation and, in many cases, robust labor markets, supported by buoyant services activity, are anticipated to sustain household spending.
Investment growth in the region is projected to be more subdued, falling short of pre-pandemic averages in many economies through 2024 and 2025. Additionally, elevated public debt and reduced fiscal space are expected to constrain public investment growth.
In 2023, growth in this region rebounded to 5.1%, from 3.4% in 2022, primarily driven by a brief surge in economic activity in China early in the year after the lifting of pandemic restrictions. However, the effects of China’s reopening quickly diminished. Investment growth was weighed down by ongoing weakness in the real estate sector, where dwindling sales and prices added financial strain on property developers. Export sectors faced challenges from weak external demand, and despite an improvement in consumption towards the end of the year, consumer confidence remained well below pre-pandemic levels.
For 2024, the growth forecast for the region carries downside risks, centered on the potential for weaker-than-expected growth in China and heightened geopolitical tensions. Other downside risks include prolonged global trade weakness, tighter-than-expected financial conditions, and damaging climate change-related extreme weather events.
Meanwhile, global growth is projected to reach 2.4% in 2024, the slowest half-decade of GDP growth in 30 years, the report said. The year 2024 reflects the third year in a row of slowing growth and is down from 2.6% last year.
The World Bank said mounting geopolitical tensions could create fresh near-term hazards for the world economy. Meanwhile, the medium-term outlook has darkened for many developing economies amid slowing growth in most major economies, sluggish global trade, and the tightest financial conditions in decades.