THE economy is likely to fall below its growth targets till 2026, Moody’s said, but noted infrastructure development will help drive it higher.
The global integrated risk assessment company retained its growth forecast for the Philippines this year and in 2025 at 5.9 percent and 6.0 percent, respectively, below the government’s 2024 goal of 6 to 7 percent, and 6.5 to 7.5 percent next year. Its projection for 2026 was lowered to 6.1 percent from the previous 6.2, still under the government’s 6.5- to 8-percent target.
Moody’s pointed out that while the Philippines’ fiscal policy is geared towards infrastructure development, inconsistent implementation over the past year has hindered the country’s growth momentum. “An aggressive push … to improve their infrastructure will support high rates of growth. Risks are present, however,” said the firm.
“The Philippines must stick to its plans and execute well,” it emphasized.
On a positive note, second quarter gross domestic product was at 6.3 percent, well within the government’s target.
Government spending on goods, services, and capital projects helped prop the economy, despite weaker household consumption and the challenges of high inflation and interest rates.
As of the first semester, the government spent P611.8 billion on infrastructure projects, 20.6 percent higher than P507.2 billion in the same period last year. This was attributed to the implementation of various road infrastructure programs and the completion of ongoing projects, as well as capital outlay projects.
Budget authorities anticipate infrastructure spending will boost economic growth by driving demand in construction, supporting related service industries, and aiding the recovery of the agriculture sector.
The government, however, is cautious about inflation’s impact on growth and living standards.
Moody’s revised its inflation projections for the country, expecting it to settle within the 2.0 to 4.0 percent target of the government.
For 2025, it trimmed its inflation forecast to 3.2 percent from 3.3, but raised it for 2026 to 3.0 percent from the previous 2.9.
Consumer price growth rose to 4.4 percent last month, higher than the 3.7 percent recorded in June.
The Bangko Sentral ng Pilipinas (BSP) revised its risk-adjusted forecast for 2024 to 3.3 percent from 3.1. For 2025 it was cut to 2.9 percent from 3.1. The BSP expects inflation to rise to 3.3 percent in 2026.
The baseline forecast for 2024 was also adjusted to 3.4 percent from 3.3, while that for 2025 was trimmed to 3.1 percent from 3.2. For 2026, the BSP expects inflation to settle at 3.2 percent.
Be the first to comment