ADB keeps PHL growth forecasts unchanged

The ASIAN Development Bank (ADB) has left Philippine economic growth forecasts unchanged for this year and into 2025 as expected monetary easing is likely to boost investment and consumption.

In its latest Asian Development Outlook, the multilateral lender said it expects the Philippine gross domestic product (GDP) to grow 6% this year, at the lower end of the government’s target of 6-7%.

For 2025, the ADB expects Philippine GDP to grow 6.2%, below the government’s target of 6.5-7.5%.

“The moderationFThe expected monetary easing in the second half of 2024 will support household consumption and investment,” the report said.

The Bangko Sentral ng Pilipinas (BSP) has kept its policy rate at a 17-year high of 6.5% since October 2023 to contain interest rates.Flat.

BSP Governor Eli M. Remolona Jr. has indicated that the central bank could start cutting rates in AugustFlation continues to slow down.

The ADB noted that household consumption remained the main driver of Philippine growth even as it slowed in the United States Ffirst quarter.

The US economy grew by a weaker than expected 5.7% Ffirst quarter. Household spending, which accounts for almost three-quarters of economic output, rose 4.6% in the January-March period, the slowest since the coronavirus pandemic.

The ADB said economic expansion is also supported by low unemployment, remittances and accelerated spending on infrastructure.

The multilateral lender also stood its groundFThe BSP expects inflation to stabilize at 3.3% this year and 3.1% next year.

FASTEST IN SOUTHEAST ASIA
The Philippines and Vietnam are expected to be the fastest growing economies in Southeast Asia in 2024 and 2025, ahead of Indonesia, Malaysia, Singapore and Thailand.

Southeast Asia’s growth is expected to average 4.6% in 2024 and 4.7% in 2025.

“Consumption – fueled in part by stable prices and increasing tourism-related activities – continued to boost Southeast Asian economies, although somewhat dampened by the tight monetary environment,” the ADB said.

An increase in infrastructure spending in the region is boosting investment demand and growth, it added.

The recovery of exports is also boosting Southeast Asia’s growth.

The Philippines and Vietnam are also expected to be the second fastest growing economies in developing Asia this year and next, just behind India. India is forecast to grow 7% this year and 7.2% in 2025.

Meanwhile, the ADB has upgraded its growth forecast for developing Asia, which includes 46 economies in the Asia-Pacific, to 5% from 4.9% this year. The 2025 growth projection for developing Asia remained unchanged at 4.9%.

“Resilient domestic demand, together with improved exports and production, will support growth this year,” the multilateral lender said.

The ADB also increased its growth forecast for China’s development, excluding Asia, to 5.1% from 5% this year. The forecast of 5.3% for next year remained unchanged.

ADB chief economist Albert Park said in a statement that the region’s fundamentals are strong, but policymakers “need to pay attention to a number of risks that could impact the outlook.”

“Policy uncertainty related to elections in major economies, particularly the US, clouds the outlook,” the ADB said.

“Heightened geopolitical tensions – including potential escalations in the Middle East and Russia’s war in Ukraine – and trade fragmentation could once again disrupt supply chains and trigger commodity price volatility.”

For China, the ADB also maintained its forecasts at 4.8% for 2024 and 4.5% for 2025.

“China’s real estate crisis could deepen, leading to weaker growth prospects. In addition, adverse weather conditions and the effects of climate change could threaten crop production,” the report said.

Robust global demand for electronics, especially semiconductors used for high-tech and artificial intelligence applications, is seen as a driver of export growth in several Asian economies, the ADB said.

The Philippines and Vietnam, which specialize in integrated circuit packaging and electronics assembly, will benefit from the rise of semiconductors, the ADB said.

“A positive development is that El NiNo has ended and La NiNA period that tends to bring cooler temperatures and more rain to parched areas, such as in Southeast Asia, could begin in the second half of this year,” the report said. — Beatriz Marie D. Cruz