The Philippines will likely post the second-fastest growth in Asia this year and in 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, the Philippine economic growth would be the second fastest among selected Asian economies, after India’s 7.5% GDP growth forecast.
The Philippines’ growth forecast for 2024 is faster than China (5%), Indonesia (5%), Malaysia (4.4%), Kazakhstan (3.5%), and Iran (3.3%), the IMF said.
It would also surpass Thailand (2.9%), Egypt (2.7%), Korea (2.5%), Pakistan (2%), Saudi Arabia (1.7%), and Japan (0.7%).
“Asia’s emerging market economies remain the main engine for the global economy,” Pierre-Olivier Gourinchas, economic counsellor and the director of research of the IMF, said in a statement.
The IMF maintained its global growth projection at 3.2% in 2024 and 3.3% in 2025, “broadly unchanged” from the previous report’s forecasts.
The IMF cut the United States growth forecast to 2.6% this year, but kept the growth estimate at 1.9% for 2025.
“The forecast for growth in emerging market and developing economies is revised upward; the projected increase is powered by stronger activity in Asia, particularly China and India,” it said.
The IMF raised its forecasts for emerging market and developing Asia, which is seen to grow by 5.4% this year and by 5.1% in 2025.
The growth projection for China was also raised to 5% for this year, “primarily on account of a rebound in private consumption and strong exports in the first quarter.” China’s growth is expected to slow to 4.5% next year, and “to continue to decelerate over the medium term to 3.3% by 2029, because of headwinds from aging and slowing productivity growth.”
However, “prospects for the next five years remain weak, largely because of waning momentum in emerging Asia,” IMF said.
The IMF said risks to the outlook “remain balanced” although upside risks to inflation “stem from a lack of progress on services disinflation and price pressures emanating from renewed trade or geopolitical tensions.”
“The risk of elevated inflation has raised the prospects of higher-for-even-longer interest rates, which in turn increases external, fiscal, and financial risks,” it said.
“Prolonged dollar appreciation arising from rate disparities could disrupt capital flows and impede planned monetary policy easing, which could adversely impact growth.
Persistently high interest rates could raise borrowing costs further and affect financial stability if fiscal improvements do not offset higher real rates amid lower potential growth.”
During its last policy meeting, the US Federal Reserve left interest rates unchanged at 5.25%-to-5.5%. Fresh projections from policy makers showed them dialing back expectations for rate cuts this year from three to just one, Reuters reported.
Source: Business World and IMF
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