The Philippines is likely to post the second-fastest growth in Asia this year and into 2025, the International Monetary Fund (IMF) said.
In its latest World Economic Outlook report, the IMF maintained its gross domestic product (GDP) growth forecast for the Philippines at 6% this year and 6.2% in 2025.
If realized, Philippine economic growth would be the second fastest among selected Asian economies, behind India’s GDP growth forecast of 7.5%.
The Philippines’ growth forecast for 2024 is faster than China (5%), Indonesia (5%), Malaysia (4.4%), Kazakhstan (3.5%) and Iran (3.3%), it said IMF.
It would also include Thailand (2.9%), Egypt (2.7%), Korea (2.5%), Pakistan (2%), Saudi Arabia (1.7%) and Japan (0.7%) surpass.
“Asia’s emerging market economies remain the key driver of the global economy,” Pierre-Olivier Gourinchas, IMF economic adviser and research director, said in a statement.
The IMF maintained its global growth projection at 3.2% in 2024 and 3.3% in 2025, “broadly unchanged” from forecasts in the previous report.
The IMF cut its growth forecast in the United States to 2.6% this year, but maintained its growth estimate for 2025 at 1.9%.
“The forecast for growth in emerging markets and developing economies has been revised upwards; The expected increase is enabled by stronger activity in Asia, particularly in China and India,” the report said.
The IMF has raised its forecasts for Asia’s emerging markets and developing countries, which are expected to grow 5.4% this year and 5.1% in 2025.
The growth forecast for China was also raised to 5% for this year, “mainly due to a recovery in private consumption and strong exports in the first quarter.” China’s growth is expected to slow to 4.5% next year, and “continue to slow in the medium term to 3.3% in 2029, due to headwinds from an aging population and slowing productivity growth.”
“However, the outlook for the next five years remains weak, largely due to declining momentum in emerging Asia,” the IMF said.
The IMF said risks to the outlook “remain balanced,” although upside risks to inflation “come from a lack of progress on services sector disinflation and price pressures arising from renewed trade or geopolitical tensions.”
“The risk of increased inflation has increased the prospects of higher interest rates for an even longer period of time, which in turn increases external, fiscal and financial risks,” the report said.
“Prolonged appreciation of the dollar due to interest rate differentials could disrupt capital flows and hamper the planned monetary policy easing.d negatively affect growth. Persistently high interest rates could further increase borrowing costs and undermine financial stability if fiscal improvements do not offset higher real interest rates against lower potential growth.”
At its last policy meeting, the US Federal Reserve left interest rates unchanged at 5.25% to 5.5%. New forecasts from policymakers show they have cut expectations for rate cuts this year from three to just one, Reuters reported. — BMDC