The World Bank has improved its outlook for the Philippine economy this year as it projects growth of six percent, citing robust domestic demand as a key driver of expansion.
The Washington-based agency’s revised forecast in its Philippine Economic Update represents an upgrade from the 5.6 percent projection released in the East Asia and the Pacific Economic Update report in April 2023.
Looking ahead to 2024 and 2025, the economy is projected to grow at a slightly slower pace of 5.9 percent.
The report said private consumption growth will be supported by improved employment, steady remittances, and better consumer sentiments, amid an expected decline in headline inflation and winding down of pent-up demand.
Investment growth is seen to soften amid ongoing fiscal consolidation that will impact public investment and tightening financial conditions that will weigh on private investment.
Ndiamé Diop, World Bank country director for Brunei, Malaysia, Philippines, and Thailand, highlighted the existence of persistent global and domestic risks that could impede recovery and poverty reduction.
Diop stressed the importance of sustaining improvements in social protection to help families, especially the poor and vulnerable, cope with economic challenges amid a global slowdown, budget constraints, high prices of essential commodities, and climate-related risks.
The World Bank identified global risks to the Philippines’ economic outlook, including the potential rise in global inflation, higher global interest rates, and the escalation of geopolitical tensions due to Russia’s invasion of Ukraine.
These factors could lead to a sharper-than-expected global slowdown, thereby hampering Philippine exports, the bank warned.
On the domestic front, the World Bank highlighted high inflation as a risk to the country’s economic outlook.
Factors contributing to this risk include natural disasters affecting food supply, the threat of El Niño, which could further constrain food production, logistics, and supply chains, as well as pressure from domestic demand.
