Growth still forecast below targets

Growth Still Expected Below Targets

World Bank maintains growth forecast for Philippines, highlighting vulnerability to climate and geopolitical shocks

An economy under pressure

The World Bank recently confirmed its forecasts for the Philippine economy, anticipating growth that will not meet the targets set due to its vulnerability to climatic and geopolitical shocks. Despite a difficult economic environment, characterized by fluctuating inflation rates and persistent global challenges, the Washington-based organization projects growth of 5,8% for this year, remaining below the government target of 6,5 at 7,5%. This analysis highlights the efforts needed to navigate an uncertain economic landscape, while emphasizing the importance of robust private consumption and a healthy labor market.

Climatic and geopolitical shocks as main obstacles

The Philippines, along with other countries in the region, faces major challenges related to climate and geopolitics. Aaditya Mattoo, an economist at the World Bank, highlighted the need for significant investments in adaptation to climate shocks, including through early warning systems and resilient infrastructure. At the same time, geopolitical conflicts, such as the war in Ukraine, have led to price increases harmful to economic growth, forcing Philippine monetary authorities to increase key interest rates.

Inflation management and monetary policy

Inflation, having peaked at 8,7% in January 2023, has since fallen back to the target range of 2,0 to 4,0%. The World Bank projects that the average rate could stabilize at 3,6% in 2024 before decelerating further. This situation reflects the central bank's efforts to anchor inflationary expectations, although risks remain, particularly in the event of a resurgence of inflation in the United States.

Reforms to stimulate growth

To achieve a modest increase in growth in the medium term, it is crucial to manage inflation and transition to a more accommodative monetary policy. The World Bank emphasizes the importance of supporting inclusive growth through prudent spending and urgent implementation of reforms aimed at raising incomes. Additionally, in the face of challenges such as low global growth and geopolitical risks, reforms must be put in place to improve the investment climate and encourage private sector involvement.


In sum, the Philippines finds itself at an economic crossroads, where navigating climate and geopolitical challenges, managing inflation, and implementing structural reforms will be critical to its economic future. Commitment to sustainable and inclusive growth remains essential to overcoming these obstacles and realizing the country's full economic potential.


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Growth Still Expected Below Targets

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