The Asian Development Bank (ADB) on Wednesday kept its economic growth forecast for the Philippines this year and next, as household consumption and investment continue to drive the economy.
The Manila-based lender, in its December 2024 Asian Development Outlook, said the economy, as measured by gross domestic product (GDP), is expected grow by 6 percent in 2024 and 6.2 percent in 2025.
GDP growth averaged 5.8 percent in the first three quarters of 2024 and 5.5 percent in 2023.
The government targets a GDP growth of 6 percent to 6.5 percent this year and 6 percent to 8 percent next year.
The ADB expects inflation to settle at 3.3 percent this year and 3.2 percent in 2025.
It also said Asia and the Pacific’s economic growth would remain steady this year and next, but the US policy changes under the incoming administration of President-elect Donald Trump are likely to affect the region’s longer-term outlook.
The report said changes to US trade, fiscal and immigration policies could dent growth and add to inflation in developing Asia and the Pacific.
Because these significant policy changes are expected to take time and be rolled out gradually, the effects on the region would most likely materialize from 2026. Impacts could be seen sooner if the policies are implemented earlier and more rapidly than expected, or if US-based companies front-load imports to avoid potential tariffs, it said.
Developing Asia and the Pacific’s economies are projected to grow by 4.9 percent in 2024, slightly below ADB’s September forecast of 5 percent, according to the report.
Next year’s growth forecast was adjusted to 4.8 percent from 4.9 percent, mainly due to weaker prospects for domestic demand in South Asia. The region’s inflation outlook was trimmed to 2.7 percent from 2.8 percent this year and to 2.6 percent from 2.9 percent next year, partly due to an expected moderation in oil prices.
“Strong overall domestic demand and exports continue to drive economic expansion in our region,” said ADB chief economist Albert Park.
“However, the policies expected to be implemented by the new US administration could slow growth and boost inflation to some extent in the People’s Republic of China, most likely after next year, also impacting other economies in Asia and the Pacific,” he said.
Under a high-risk scenario, ADB projects that aggressive US policy changes could erode global economic growth slightly over the next four years, by a cumulative 0.5 percentage points.
Broad-based tariffs are likely to dent international trade and investment, while leading to a shift toward more costly domestic production. At the same time, reduced immigration could tighten the US labor supply. Combined with a potentially more expansionary fiscal stance under the incoming Trump administration, tariffs and migration curbs could rekindle inflationary pressures in the US.
Despite the scale of the assumed US policy changes, particularly on tariffs, the impacts on developing Asia and the Pacific are limited under this high-risk scenario.
Even in the absence of additional policy support, gross domestic product growth in the PRC could slow by an average of only 0.3 percentage points per year through 2028. Negative spillover effects across the region, via trade and other links, would likely be offset by diversion of trade and relocation of production from the PRC to other economies.
