THE Asean+3 Macroeconomic Research Office (AMRO) is maintaining its forecasts for Philippine growth, saying that this would be buoyed by investments and services exports, even as it trimmed the outlook for the region.
“We did not change the forecasts for the Philippines as with regard to GDP (gross domestic product),” AMRO chief economist Hoe Ee Khor said during the release of an October update to its regional outlook.
The country is still expected to grow by 6.1 percent this year and 6.3 percent in 2025 — projections that were previously released in July and reiterated in September following an annual consultation visit.
“This is because we mainly expect investment spending to be high this year, together with services exports,” Khor said.
AMRO’s July forecasts for 2024 and 2025 GDP growth were trimmed from 6.3 percent and 6.5 percent, respectively. At that time, it noted that external demand was weaker than expected and that infrastructure investments were also an issue.
The current 2024 forecast falls near the lower end of the government’s 6.0- to 7.0-percent target for the year, but is still higher than 2023’s below-target result of 5.5 percent.
That for 2025, meanwhile, falls outside the 6.5- to 7.5-percent goal.
As for the Asean+3 region, which comprises the 10 members of the Association of Southeast Asian Nations and partners China, Hong Kong, Japan and Korea, AMRO said that growth would hit 4.2 percent this year and 4.4 percent in 2025.
“Continued recovery in external trade and tourism, alongside resilient domestic demand, will remain the key drivers of growth,” it said.
The 2024 projection, however, is lower than the 4.4 percent seen in July, but that for next year is slightly higher than the previous 4.3 percent.
The downward revision for this year was said to be primarily due to changes in the forecasts for China and Vietnam, which are now seen growing by 5.1 percent and 6.2 percent, respectively, from 5.2 percent and 6.3 percent previously.
Forecasts for all other economies in the region were unchanged.
Asean as a whole will still grow by 4.8 percent in 2024, but the Plus-3’s expansion will be lower at 4.1 percent from 4.4 percent previously.
“Recent developments have shifted the risk landscape for the Asean+3 region,” Khor said.
“The sharp but short-lived market adjustments that we witnessed in early August is a reminder of the risk of further spikes in financial market volatility,” he added.
“The potential escalation of protectionist policies following the US presidential election is another key risk for the region.”
The 2025 forecasts, meanwhile, were raised to 4.3 percent from 4.1 percent for the Plus-3 with the China forecast a higher 5.1 percent from 4.9 percent.
The Asean outlook was also revised upwards to 4.9 percent from 4.8 percent, with Thailand and Vietnam now seen growing by 3.3 percent and 6.6 percent, respectively, instead of 3.0 percent and 6.5 percent.
Inflation in the Asean+3 region — excluding Laos and Myanmar — was forecast to ease to 1.9 percent in 2024, an improvement from the July forecast of 2.1 percent.
“Overall, inflationary pressure remains well contained in the region, in line with the expectation of easing global inflation,” AMRO said.
The consumer price growth forecast for the Philippines was retained at 3.3 percent and Khor said an ongoing slowdown would allow the Bangko Sentral ng Pilipinas to keep cutting interest rates to support growth.
AMRO noted that recent US economic data had sparked “some concerns” for the region. Labor market and purchasing managers’ index data, in particular, could affect regional imports.
“The November election outcome could also significantly affect the region’s economic outlook, particularly if it signals an intensification of US-China trade tensions or broader trade frictions,” it also said.
Monetary policy easing by central banks and China’s announcement of stimulus measures “will have positive spillover effects on the rest of [the] region,” Khor said.
“However, rising external and geopolitical uncertainties underscore the need to continue strengthening resilience and enhancing cooperation in the region.” WITH A REPORT FROM ED PAOLO SALTING
