Manila – The World Bank has projected continued strong growth for the Philippine economy, emphasizing the importance of implementing key reforms to sustain this growth. According to Ndiame Diop, World Bank country director for Brunei, Malaysia, the Philippines, and Thailand, during the briefing for the Philippines Economic Update (PEU) December 2023 edition, the Philippines is expected to maintain strong economic performance in the coming years, driven by a healthy labor market and declining inflation, which will boost household consumption.
According to Philippines News Agency, the Philippine economy is projected to grow by 5.6 percent this year and increase slightly to 5.8 percent in 2024. The services sector, particularly the recovery of the tourism sector and the consistent performance of the information technology and business process outsourcing industry, is expected to be the primary growth driver. Diop highlighted that the full implementation of several investment reforms is crucial to enhance the country’s competitiveness in attracting foreign investment and strengthening its global growth prospects. The Philippine economy expanded by 5.9 percent in the third quarter, with a year-to-date expansion of 5.5 percent. Despite global challenges, the Philippines has been among the top performers in the region, attributed to its resilient domestic demand which helped mitigate external headwinds. Inflation is expected to average at 5.9 percent this year and decrease to 3.6 percent in 2024.
Policy recommendations from the World Bank include the full implementation of key reforms to counter high inflation amid global commodity price volatility and high borrowing costs. These reforms encompass amendments to the Public Services Act, Retail Trade Liberalization Act, the Foreign Investment Act, and changes to the implementing rules and regulations of the Renewable Energy Act, allowing foreign ownership of renewable energy projects. Senior economist Ralph Van Doorn highlighted short-term domestic policy priorities, such as containing elevated inflation and supporting vulnerable sectors. In the short term, enhancing forecasting and planning for food prices, stabilizing food supply, and reducing market volatility are fundamental. In the long term, effective public spending in agriculture to boost productivity and improve local food supply is vital. Additionally, the government’s Pantawid Pamilyang Pilipino Program, digital food stamp program, cash subsidies to farmers, and fuel subsidies to public utili
ty vehicle operators are essential in protecting the incomes of poor and vulnerable Filipinos. Van Doorn also stressed the importance of fiscal consolidation, reducing fiscal deficits, and improving revenue intake. Effective implementation of pro-investment reforms in sectors like renewable energy, trade, transport, and telecommunications is expected to generate economy-wide productivity gains. He also mentioned that reforms to increase access and enhance the resilience of water supply, sanitation, education, and healthcare systems could further enhance potential growth.
