ADB Retains 2024, 2025 PH Economic Growth Forecast

The Asian Development Bank (ADB) has maintained its economic growth forecast for the Philippines at 6% for 2024 and 6.2% for 2025, as stated in the September edition of its flagship publication, Asian Development Outlook (ADO). This projection remains unchanged from its July forecast.

According to the Manila-based lender, moderating inflation, monetary easing, and sustained public spending, particularly on major infrastructure projects, are expected to bolster the country’s economic growth over the next two years. These figures align with the lower end of the Philippine government’s GDP target of 6% to 7% for 2024 and 6.5% to 7.5% for 2025.

“The expansion in gross domestic product will be driven by broad-based domestic demand, supported by lower inflation and interest rates,” the ADB said.

The Philippines recorded a 6.3% growth rate in the second quarter of 2024, the fastest in five quarters, largely fueled by strong consumption activities.

In light of the sustained decline in food prices, partly due to reduced tariffs on rice imports, the ADB has lowered its inflation forecast for 2024 to 3.6% from its April estimate of 3.8%. Inflation is expected to further ease to 3.2% in 2025, compared to the previous estimate of 3.4%.

Pavit Ramachandran, ADB’s country director for the Philippines, highlighted that the nation is well-positioned to lead growth in Southeast Asia, citing rising government revenues, increased public spending on infrastructure and social services, and reforms aimed at attracting more investments as key factors for sustained economic growth.

However, the ADB also pointed out potential risks that could impact growth, including severe weather events, external economic slowdowns, financial volatility due to U.S. monetary policy changes, geopolitical tensions, and rising global commodity prices.

The bank underscored the government’s commitment to infrastructure spending, which is projected to account for 5% to 6% of GDP annually from 2024 to 2028, following a 5.8% share in 2023. The “Build Better More” infrastructure program includes 66 ongoing projects and 31 more approved for implementation as of August 2024. This program aims to improve physical connectivity through railways, bridges, and airports, and to strengthen water management, digital connectivity, energy, and agriculture projects.

ADB is actively supporting key infrastructure initiatives, such as the Malolos Clark Railway Project, the South Commuter Railway Project, the Bataan-Cavite Interlink Bridge Project, and the Integrated Flood Resilience and Adaptation Project to enhance flood and climate change resilience in three major river basins in the country.