Philippine economic growth will likely rebound this year and further accelerate in 2025, the Asean+3 Macroeconomic Research Office (AMRO) said in their report.
"The Philippines will benefit from the upswing in terms of the external demand and also the recovery in tourism," AMRO chief economist Hoe Ee Khor told a briefing.
Gross domestic product growth moderated to 5.6 percent last year, missing the government's 6.0- to 7.0-percent target.
AMRO maintained its 2024 growth forecast at 6.3 percent, saying that a strong recovery in domestic consumption would be one of the key drivers.
For next year, economic growth is expected to pick up to 6.5 percent.
Both projections fall within the government's recently-revised targets of 6.0-7.0 percent for 2024 and 6.5-7.5 percent for the following year.
Within the Association of Southeast Asian Nations, AMRO said the Asean-6 economies of Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam would continue to anchor regional growth by expanding 4.9 percent and also contributing an average of 10 percent to global growth.
"These economies are thus poised to account for a larger share of the regional and world economy by the end of the next decade," it said.
A rebound in merchandise exports as well as firm domestic demand are expected to continue driving Asean growth.
"Growth is forecast to be maintained in 2025 as global economic prospects improve and economies converge toward potential growth," it added.
As for the Philippines, AMRO warned that the outlook was clouded by various risks and challenges.
"In the near term, growth prospects are relatively robust, but high inflation is a risk, especially as a result of local supply shocks in the food sector and the impacts of geopolitical conflicts on international energy prices," it noted.
These will put pressure on inflation, dampening domestic demand.
There is also the risk of an economic downturn among key trading partners and fluctuations in global financial markets.
"Looking at the longer term, growth potential will largely hinge on the economic scarring effects of the pandemic, the pace of infrastructure development, and heightened geopolitical tensions between China and the United States," AMRO said.
The country could also suffer from increasing social and economic costs due to global climate change, which requires an "urgent need for a comprehensive strategy to foster resilient, sustainable, and inclusive long-term growth."
As for inflation, AMRO still expects it to fall within target at 3.6 percent this year and 2.9 percent next year.
"I think there's a slight risk this year because of the synchronized upswing in the global economy," Khor said.
Consumer price growth rose to 3.7 percent last month, from 3.4 percent in February, but still fell within the 2.0- to 4.0-percent target of the Bangko Sentral ng Pilipinas.
Source: Manila Times