Output expansion across the Philippines in 2024 likely moderated to 5.5 percent in terms of the gross domestic product (GDP), from actual growth averaging 5.6 percent the year before, according to latest estimates by financial information and analytics firm S&P Global.
Its assessment reflects the projected growth of Asia-Pacific countries whose continued expansion is seen impeded by global demand and US trade policy. The continued growth in Asia-Pacific countries is aided by lower interest rates and inflation helping boost the spending power of its citizens, the S&P unit said.
In the case of the Philippines, moderating growth of 5.5 percent in 2025 is forecast to bounce back to 6 percent this year as domestic demand remains broadly resilient. It helps that the Philippines is in that part of the world where the collective expansion of member economies average slightly higher to 4.5 percent from an earlier forecast of only 4.4 percent, the S&P unit said.
The Philippines grew by 5.2 percent in the third quarter last year, from a revised 6.4 percent expansion a quarter earlier and below the consensus forecast averaging 5.7 percent as government spending moderated to only 5 percent from 11.9 percent while investments slowed to 7.5 percent from 9.7 percent.
Inflation averaging 6 percent in the Philippines in 2023 is forecast to round 2024 to only 3.3 percent and still lower this year to 3.1 percent. The 11-month inflation in the Philippines averaged only 3.2 percent although the November readings reflected a three-month high of 2.5 percent that surpassed projections of only 2.4 percent on account of food-driven price pressures.
The policy rate of the Bangko Sentral ng Pilipinas of 5.75 percent at the moment versus 6.5 percent last year, is seen adjusted lower to 4.75 percent later this year. The view is consistent with developments in which inflation across jurisdictions have been mostly under control, allowing central banks like the BSP to cut the cost of borrowing money.
“We expect policy rates to come down the most through the end of 2025 in New Zealand and the Philippines, and the least in Taiwan and Malaysia,” S&P Global said.
The policy-making monetary board under BSP governor Eli Remolona has committed to a cautious approach to monetary easing to ensure price stability while fostering sustainable growth as well as employment.
Across Asia-Pacific, central banks are projected to take their time in bringing down interest rates as the so-called interest differential with US interest rates render a particular economy’s currency or market vulnerable to shocks, the S&P unit said.
