The World Bank on Monday upgraded its growth outlook for the Philippines amid the recovery of the services sector.
It now sees the Philippine economy expanding 5.8 percent in 2024, faster than its October 2023 forecast of 5.6 percent.
The World Bank, in its East Asia and the Pacific Economic Update, also raised its 2025 gross domestic product (GDP) growth forecast to 5.9 percent from the previous estimate of 5.8 percent.
World Bank East Asia and Pacific chief economist Aaditya Mattoo said the recovery in services, coupled with significant reforms such as the enactment of the Public Services Act, would support the economic growth in the Philippines.
The Philippines is expected to remain among the fastest-growing Southeast Asian economies this year, surpassing Vietnam’s 5.5 percent, Indonesia’s 4.9 percent, Malaysia’s 4.3 percent and Thailand’s 2.8 percent.
It is also expected to outperform the regional growth of 4.5 percent expected for the developing East Asia and the Pacific in 2024.
“While recovering global trade and easing financial conditions are expected to support economies in the region, increasing debt, protectionism and policy uncertainty could dampen growth,” the World Bank said in its report.
“Regional growth is projected to ease to 4.5 percent in 2024 from 5.1 percent last year. Growth in developing East Asia and Pacific excluding China is projected to pick up to 4.6 percent this year from 4.4 percent in 2023,” it said.
Growth in China is projected to moderate to 4.5 percent this year from 5.2 percent in 2023, because of near term problems, such as high debt and a weak property sector, as well as longer-term challenges, such as aging and trade frictions.
Growth among Pacific Island countries is forecast to decline to 3.6 percent in 2024 from 5.6 percent last year, as the post-pandemic rebound dissipates.
The World Bank said the region’s current macroeconomic challenges risk obscuring the microeconomic foundations of longer-term growth. “Over the last decade, growth has been driven primarily by investment rather than by increased productivity of firms,” it said.
It noted that private investment is now weak, and productivity declining – further inhibiting the incentive to invest.