The ASEAN+3 Macroeconomic Research Office (AMRO) said the Philippines would continue its upward trajectory, expanding 6.1% this year and 6.3% in 2025, driven by government spending and services exports.
In the latest October 2024 ASEAN+3 Regional Economic Outlook update released on Thursday, AMRO stated that the Philippines' economic growth will be the second highest in the region, after Vietnam's projected growth of 6.2% in 2024 and 6.6% in 2025.
In a virtual briefing, AMRO chief economist Hoe Ee Khor said the forecast is "still among the strongest in the region."
"We didn't change the forecast for the Philippines. We expect growth to be 6.1%, which will be an improvement from last year's 5.6%. For next year, we project 6.3%, mainly due to higher government investment spending this year, together with services exports," Khor said.
"So, like most other countries, the Philippines went through a rough patch last year; the interest rate was pretty high. The governor has cut interest rates by 25 basis points and indicated another cut later this month," he added.
The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) earlier reduced key interest rates by 25 basis points to 6.25%, noting that the balance of risks to inflation was tilted toward the downside for this year and in 2025.
"The governor himself indicated that there's potential for further cuts of 25 basis points, but he's going to wait until he looks at the numbers on inflation," Khor said.
Inflation accelerated to 4.4% in July but eased to 3.3% in August.
The September inflation data will be released by the Philippine Statistics Authority this Friday, but the BSP previously stated it expects inflation to further decrease to between 2.0% and 2.8%.
AMRO, meanwhile, expects the country's inflation to settle at 3.3% for 2024 and further decelerate to 3.1% in 2025.
"So far, inflation has behaved pretty well. It spiked up in July, then came back in August, and our expectation is for it to continue to trend down for the whole year," Khor said.
Khor noted that the easing inflation will allow the BSP to reduce policy rates further this year.
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