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Philippines On Track To Do Better In 2024, After Performing Well In 2023

The Philippines will do even better this year, after performing well in a challenging economic and financial environment in 2023 that was beset by ongoing geopolitical tensions, trade restrictions, and high domestic commodity prices, says the country’s then-finance chief in January 2024.

In a statement from the Presidential Communications Office, then-Finance Secretary Benjamin E. Diokno, who was succeeded by Ralph Recto on 12 January 2024, said the Philippines is forging an even better outlook for 2024 with the reconstitution of the Economic Development Group (EDG) and the creation of the Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO), along with the implementation of coherent macroeconomic policies, particularly with the establishment of the Medium-Term Fiscal Framework (MTFF), and the implementation of game-changing structural reforms.

Unilateral organisations appear to share the optimism. “The International Monetary Fund sees that the Philippine economy will have the strongest growth relative to ASEAN-4,” highlights Mr Diokno. The IMF’s forecast of 6% for the Philippines is higher than the forecasts for Indonesia (5%), Thailand (4.4%) and Malaysia (4.3%). The growth target is also higher than the 4.7% forecast for ASEAN as a whole.

As explained by the then-finance chief, the positive outlook is underlined by an acceleration in public investment and improved external demand for the Philippines’ exports, and the implementation of key structural reforms to stimulate exports and foreign investment, and raise growth potential. Other factors include the country’s bright jobs market, strong manufacturing sector, sound fiscal policy, well-performing monetary policy and financial sector, and continuing digitalisation.

The Philippines’ Development Budget Coordination Committee (DBCC) has forecast the economy to grow between 6.5% and 7.5% in 2024, a range slightly higher than the IMF (6%) and the World Bank’s forecasts (5.8%) for 2024. Still, 5.8% positions the Philippines as the fastest-growing economy among the Asian countries, in joint-first place with Cambodia, for this year.

East Asia and Pacific Country Forecasts

Source: World Bank, January 2024

Credit rating agencies and market analysts also express confidence in the country’s macroeconomic fundamentals, says Mr Diokno. “In particular, the S&P’s stable outlook reflects its ‘expectation that the Philippine economy will maintain healthy growth rates and the fiscal performance will materially improve over the next 24 months’.”

While acknowledging the ongoing challenges like the El Niño effect, and geopolitical and trade tensions, the country’s growth is expected to be driven by strong private consumption, supported by the expected return of inflation within the target range, falling oil prices, robust public spending, greater investments drawn to the country’s sound macroeconomic fundamentals, investment-grade credit rating, and the implementation of structural reforms, and increased demand for Philippine exports as supply chain bottlenecks ease, Mr Diokno points out.

Internal and external initiatives and partnerships are also expected to boost trade, including the enactment of the Public-Private Partnership (PPP) Code and the Maharlika Investment Fund (MIF); the ratification of the Regional Comprehensive Economic Partnership (RCEP) and other Free Trade Agreements (FTAs); the expected passage of key tax reforms, and local government units (LGUs) being engines of economic growth, says Mr Diokno.

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