MANILA – The World Bank maintained its 2024 Philippine economic growth forecast at 5.8 percent and anticipates the country to rank as the second fastest-growing economy in East Asia and the Pacific.

In its April 2024 East Asia and Pacific Economic Update report, the World Bank also upgraded its 2025 Philippine economic growth forecast to 5.9 percent from the previously projected 5.8 percent.

The Philippines and Cambodia are expected to be the second highest growing economies in East Asia and the Pacific, following Palau, which is projected to grow by 12.4 percent.

This year’s projected economic expansion surpasses the forecasts for China (4.5 percent), Indonesia (4.9 percent), Malaysia (4.3 percent), Vietnam (5.5 percent), and Thailand (2.8 percent).

Consumption and the recovery in services have been key factors driving growth in the Philippines, according to World Bank East Asia and Pacific chief economist Aaditya Mattoo. Additionally, significant reforms such as the Public Services Act are expected to attract greater foreign investment in the long run.

In a separate Macro Poverty Outlook released on Monday, the World Bank noted that the improvement in the labor market and easing inflation will contribute to growth in household income. Poverty is projected to decline, with the poverty incidence expected to decrease from 17.8 percent in 2021 to 12.2 percent in 2024 and further to 9.3 percent in 2026.

However, risks to the country’s growth outlook remain skewed to the downside. Elevated inflation could impede economic activity by maintaining the policy rate at a higher level for an extended period. Other risks include a potential slowdown in China’s growth and escalating geopolitical tensions, which could lead to a more significant-than-expected slowdown in growth, further dampening external demand.

Mattoo emphasized the Philippines and other countries in the region are highly susceptible to climate shocks. Investment in adaptation is crucial, ranging from early warning systems to better infrastructure and agriculture investments in more resilient structures capable of withstanding such shocks.

(By El Amigo/MNM)