December 12, 2024 | 12:00am
MANILA, Philippines — The Asian Development Bank (ADB) has trimmed its inflation forecast for the Philippines this year, but retained its growth outlook.
“The 2024 inflation forecast is revised down to 3.3 percent from 3.6 percent and maintained at 3.2 percent in 2025,” the multilateral lender said in its Asian Development Outlook December 2024 report released yesterday.
Inflation rose to 2.5 percent in November from 2.3 percent in October, bringing the average in the January to November period to 3.2 percent, within the government’s two to four percent target band.
Last year, inflation averaged six percent.
The ADB said the reduction in rice import tariffs from June helped contain food inflation.
Food inflation was at 3.5 percent in November and averaged 4.6 percent from January to November.
“Inflation is expected to remain within the central bank’s two to four percent target, providing scope for further monetary policy easing,” the ADB said.
Policy rates were cut by a total of 50 basis points in August and October this year, bringing the benchmark rate to six percent.
The same report showed that the ADB maintained its economic growth forecast for the Philippines at six percent this year and 6.2 percent for 2025.
These growth forecasts are within the government’s revised growth targets of six to 6.5 percent for this year and six to eight percent for next year.
The Philippine economy expanded by 5.2 percent in the third quarter, slower than the previous quarter’s 6.4 percent growth and the six percent expansion in the third quarter of last year.
For the first three quarters, the country’s gross domestic product averaged 5.8 percent.
“Household consumption and investment continue to drive the economy with both rising faster in Q3 (third quarter). Moderating inflation and monetary policy easing should continue to support growth,” the ADB said.
In addition, it said the services sector, construction and manufacturing are seen to help drive overall growth.
The ADB also expects public infrastructure projects to continue to lift growth, along with brisk private construction.
The multilateral lender, however, flagged risks that may affect the outlook. These include the faster or larger-than-expected shifts in US trade, immigration and fiscal policy, geopolitical tensions and China’s property market fragility.
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