MANILA -- 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, the country’s finance chief said on Sunday.
In a statement, Finance Secretary Benjamin E. Diokno 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.
“Most multilateral organizations share this optimism as they expect the Philippines to be one of the fastest growing economies among the major economies in Asia in 2023 and 2024 even with recent revisions in economic projections,” Diokno said.
“The International Monetary Fund (IMF) sees that the Philippine economy will have the strongest growth relative to ASEAN-4, and Vietnam supported by an acceleration in public investment and improved external demand for the Philippines’ exports, after the country has withstood a confluence of shocks through its appropriate policy response and recent implementation of key structural reforms to stimulate exports, spur foreign investment, and raise growth potential,” he added
The World Bank (WB) agrees that the country’s economy will accelerate in 2024 driven by private consumption, projecting it to become the fastest-growing economy among Asian countries in the East Asia and Pacific region in 2023, and the second-fastest in 2024, Diokno said.
“Credit rating agencies and market analysts also express confidence in the country’s macroeconomic fundamentals. 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.”
The Fitch Ratings, on the other hand, forecasts that the country’s “growth over the medium term will be considerably stronger than the median of similarly-rated peers, while Moody’s deems the country to have a “rapid economic growth relative to peers, complemented by the stabilization and eventual reversal of the deterioration in fiscal and debt metrics.”
Diokno expects the Philippine economy to remain robust, seeing it to grow close to the low end of the 6.0 to 7.0 percent growth target for 2023, despite a difficult global environment and existing domestic challenges.
He cited factors such as the country’s bright jobs market, strong manufacturing sector, sound fiscal policy, well-performing monetary policy and financial sector, improving external sector, and continuing digitalization.
According to Diokno, the robust economic growth will continue in 2024.
“While multilateral organizations project a slower global outlook for 2024 at 2.9 percent, the Philippine economy is expected to improve, reinforcing its status as one of the fastest-growing economies in the region,” he said, stressing the Development Budget Coordination Committee (DBCC) assumes a growth rate of 6.5 to 7.5 percent for the country in 2024.
“Amid the ongoing strong El Niño 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 lured by 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.”
Diokno enumerated factors to support growth, such as administration’s swift policy actions through the MTFF in response to the challenges arising from the global shocks, timely approval of the 2024 national budget, inflation rate returning to the target range of 2.0 to 4.0 percent in 2024 until 2028, and confidence in the economy by investor-grade credit ratings agencies.
Also, the enactment of the Public-Private Partnership (PPP) Code and the Maharlika Investment Fund (MIF), the country’s strong external position, the ratification of the Regional Comprehensive Economic Partnership (RCEP) and other Free Trade Agreements (FTAs), the expected passage of key tax reforms, and LGUs being engines of economic growth, are also expected to boost growth., according to Diokno. (PND)
