18-2-2024 (MANILA) The Philippines has claimed the title of Southeast Asia’s fastest-growing economy last year, driven by robust consumption, services, and investment.
The country’s gross domestic product (GDP) expanded by 5.6%, surpassing the median growth rate of 5.5% predicted by economists surveyed. Following the release of this data, stocks in the Philippines rose by over 1%.
The local currency, the peso, experienced a slight decline of 0.1% against the US dollar.
Although the annual growth rate falls slightly short of the government’s 6-7% target, it is still the highest in the region thus far.
Secretary Arsenio Balisacan of the National Economic and Development Authority expressed confidence on January 31 that the economy will continue to expand at a rate of 6.5-7.5% in 2024, allowing the Philippines to maintain its position as the region’s top performer in terms of growth.
President Ferdinand Marcos Jr. has also expressed optimism about the prospects of the consumption-driven economy, particularly as inflation cools down and the central bank pauses one of the most aggressive interest rate tightening campaigns in the region.
However, sustaining this remarkable performance will require substantial efforts from the government, as monetary policymakers are unlikely to shift towards easing policies in the near future due to lingering price risks. While government spending experienced a decline of 1.8% in line with fiscal consolidation efforts, Balisacan expects the expansion of the services sector to continue driving the country’s economic growth.
Despite the resilience of domestic consumption, a sluggish global economy, high inflation rates, and interest rates pose challenges to significant improvements in growth prospects for the Philippines this year, according to Robert Dan Roces, the chief economist at Security Bank in Manila.
