August 26, 2024 | 12:00am
MANILA, Philippines — Moody’s Analytics expects growth in Asia-Pacific economies, including the Philippines, to remain strong in 2024 and 2025, driven by improving trade, robust investment and sustained consumer spending.
In a report written by Steven Cochrane, chief APAC economist at Moody’s Analytics, the firm said the outlook for the region in 2025 is good, even though economic growth in China and India will likely slow over the coming year.
“Growth will accelerate in Southeast Asia, supported by trade, investment, consumption, generally stimulative fiscal policy, and, by early next year, easing monetary policy,” Cochrane said.
Moody’s Analytics has maintained its gross domestic product growth projection for the Philippines at 5.9 percent this year, slightly below the low end of the government’s six-to-seven-percent target.
The growth forecast for the Philippines for this year is the third highest in the region, after India (6.8 percent) and Vietnam (6.4 percent). This is followed by Indonesia (5.2 percent), Malaysia (5.1 percent) and China (4.8 percent).
Moody’s also kept its six percent forecast for 2025, which is also below the government’s target range of 6.5 to 7.5 percent but is still the third fastest growth in the region.
“The Philippines and Indonesia will not lag far behind Vietnam, but their economies are not as closely tied to the global economy. An aggressive push by both countries to improve their infrastructure will support high rates of growth,” Cochrane said.
Southeast Asia, particularly Malaysia and Vietnam, is benefiting from robust investment spending from local and international sources, he said.
Fiscal policy in the Philippines is also strongly focused on infrastructure development, which will continue to attract investors.
“But the actual execution of this policy has been uneven this past year,” he said. “The Philippines must stick to its plans and execute well.”
Geopolitical risks also add uncertainty to the outlook amid conflicts over the disputed West Philippine Sea and the current conflict in the Middle East. The outcome of the US November election will also impact the region.
“Should Donald Trump win the presidency, it would lead to higher tariffs on goods imported by the US from China and much of the rest of the world,” Cochrane said.
Higher tariffs on goods flowing into the US would hurt China and hit Asia’s small open economies such as Hong Kong and Singapore. Taiwan and Vietnam also face above-average risk.
“The less export-sensitive economies of Indonesia and the Philippines face much less risk in the Trump-election scenario,” he added.
The Philippine economy grew by 6.3 percent in the second quarter. This was faster than the 4.3 percent expansion in the second quarter of last year and the revised 5.8 percent growth in the first quarter of 2024.
Growth in the first half of the year stood at an average of six percent.
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