The government is aiming for more modest 6.5- to 7.5-percent growth in 2025, but multilateral organizations expect the target to be missed due to continued headwinds and structural issues.
Economic managers, however, remain optimistic and insist that the country — even if it misses the growth goals — will still continue to outperform its regional peers given interventions, aimed at lowering inflation and spurring investments.
"[We] expect the Philippine economy to expand to 6.5 to 7.5 percent; still surpassing most emerging economies in the Asia Pacific region," Budget Secretary and Development Budget Coordination Committee Chairman Amenah Pangandaman told The Manila Times.
"To achieve this, the economic team will continue implementing growth-enhancing strategies that address inflation concerns, promote digital transformation, accelerate infrastructure development, strengthen inter-industry supply chain linkages and expand skills development," she added.
Finance Secretary Ralph Recto, meanwhile, is also optimistic that the bottom end of the 2025 target will be achieved, especially with the Bangko Sentral ng Pilipinas (BSP) expected to finally start lowering interest rates that have weighed on consumption and investments.
"I am really confident that we will still hit the 6.0- to 7.0- percent [growth target for] this year and the second quarter will be much better, and if we are able to reduce rates earlier than expected...maybe next year, the 6.5 percent [goal] is possible," Recto said.
Pagdanganan was in agreement, saying that the country is currently on track to "achieving our growth targets, especially for 2024."
Outside observers, however, aren't as optimistic but concur that Philippine economic growth will likely again be among the highest in the region in the near term.
The World Bank last month retained its 2024 and 2025 growth forecasts of 5.8 percent and 5.9 percent, respectively, and also projected a 5.9-percent result for 2026. All are below the government's targets.
The expansion, the Washington-based multilateral organization said, will be supported by robust domestic demand, strong services growth and improved trade.
The International Monetary Fund has also retained its forecasts for Philippine economic growth with the latest update to its World Economic Outlook report pegging these at 6.0 percent this year and 6.2 percent in 2025.
This came as the Asean+3 Macroeconomic Research Office trimmed its 2024 and 2025 growth outlooks for the country to 6.1 percent and 6.3 percent, respectively, from 6.3 percent and 6.5 percent previously.
AMRO said that the change to the 2024 forecast was due to a weaker-than-expected external recovery, and the lack of critical infrastructure was also said to be holding back the economy.
The Manila-based Asian Development Bank, meanwhile, retained its 2024 and 2025 growth projections for the country at 6.0 percent and 6.2 percent, respectively, citing lower inflation and an expected monetary easing.
While the forecasts for 2024 are mixed compared to the official target, those for 2025 are all below the government's goals. Still, all are improvements from last year's actual growth of 5.5 percent, which was slower than 2022's 7.6 percent and also missed the 2023 target of 6.0-7.0 percent.
In addition to inflation and high interest rates, government underspending was said to have been a factor in the slowdown, an issue that Pangandaman has said was being addressed.
Last week, she told The Manila Times that the government would ramp up spending in the second half to keep economic growth on track to hitting the 2024 target. Government agencies have been asked to submit spending reports and prepare catch-up plans, she added.
Economic managers acknowledged the risks to growth, and Pangandaman said both external and domestic factors would have to be addressed.
A particular priority is that of keeping inflation under control through measures such as the recently-revised 2024 to 2028 Comprehensive Tariff Program and direct support for affected sectors via the Food Stamp Program.
In particular, the government has slashed tariffs on rice imports to 15 percent from an already-lowered 35 percent beginning this month up to 2028, subject to periodic review. Surging prices due to export bans by rice-producing India and the impact of El Niño on harvests were said to have driven a recent rise in overall consumer price growth.
Inflation, which hit a 14-year high of 8.7 percent in January last year, has since returned to the 2.0- to 4.0-percent target range. It has stayed there for 7 straight months and, despite fears of another breach, snapped this year's 4-month rise and slowed to 3.7 percent in June.
This has encouraged the BSP to talk up an easing of key interest rates next month despite fears that doing so before the US Federal Reserve would have an adverse impact on the peso. While the currency has fallen to levels not seen in nearly 2 years, the central bank said it was more concerned over volatile changes and would use the country's ample reserves to intervene if needed.
BSP Governor Eli Remolona Jr., who first raised the prospect of an August easing in May, most recently said waiting too long to cut could affect the country's potential growth.