HIGHEST GDP. The Philippines is seen to have the highest economic growth rate among ASEAN member states and neighboring countries of China, Japan, and South Korea. The ASEAN+3 Macroeconomic Research Office's (AMRO) outlook for the Philippine gross domestic product in 2024 is at 6.3 percent. (PNA file photo)
MANILA – The ASEAN+3 Macroeconomic Research Office (AMRO) has projected that the Philippines will emerge as the fastest growing economy in the region, especially if the government manages the country’s inflation well.
The AMRO reported Thursday that its gross domestic product (GDP) growth outlook for the Philippines in 2024 is at 6.3 percent, which is the highest among the 10 ASEAN member states as well as the three neighboring countries in East Asia-China, including Hong Kong, Japan, and South Korea.
The AMRO’s growth projection for the Philippines is higher than Vietnam’s and China’s forecasts of 6 and 5.3 percent, respectively, this year.
“The Philippine economy has held up very well despite high inflation and interest rates, and it’s much less dependent on exports than other countries in the region,” AMRO chief economist Hoe Ee Khor said in an online briefing.
Khor added that the country needs to keep its monetary policy tight to manage inflation.
“We agree with the BSP’s (Bangko Sentral ng Pilipinas) view that the rates should remain tight until inflation is down to within target,” he said.
The AMRO also forecast that inflation for 2024 will settle at 3.6 percent, falling within the government’s target of 2 percent to 4 percent.
Khor said “it would be good for the Philippines” to be in tune with the United States Federal Reserve System in its monetary policy.
Many economists and analysts expect that the Fed will cut interest rates by the second half (H2) of 2024.
“As long as the economy is doing strongly, we don’t see the urgency for BSP to cut rates,” Khor added.
Robust bank loans
Meanwhile, as central banks are expected to cut interest rates by H2 2024, credit demand in the Philippines is expected to further increase this year.
BMI, a unit of Fitch Solutions, also released a commentary Thursday, noting that loan growth in the country will increase by 10 percent at end-2024 from 5.7 percent in 2023.
“We expect loan growth to stage a stronger performance in 2024. Better macroeconomic conditions and lower interest rates in H2 2024 bode well for the credit environment,” BMI said.
It added that banks are expected to have improved their net margins since the elevated interest rates.
It said that the tightening cycle has already led to significant improvements in profitability ratios.
Return on assets (ROA) rose from 1.19 percent in the first quarter of 2022 to 1.43 percent in the third quarter of 2023.
Return on equity also grew from 9.64 percent in Q1 2022 to 11.6 percent in Q3 2023; and net interest margins also widened from 3.5 percent to 3.98 percent in the same period. (PNA)
