The Philippine government’s strong focus on upgrading infrastructure is expected to support sustained high economic growth, despite noting “uneven execution” of the infrastructure program over the past year, according to Moody’s Analytics.

Moody’s maintained its GDP growth forecasts for the Philippines at 5.9% for 2024 and 6% for 2025, citing increased government investment in infrastructure development as a key factor.

However, if these projections are realised, growth this year would fall short of the Marcos administration's target range of 6% to 7%, as well as the 6.5% to 7.5% expansion goal for 2025.  

Moody’s Analytics also highlighted that uneven state spending on infrastructure could pose risks to achieving these growth targets.

“Fiscal policy in the Philippines is strongly focused on infrastructure development, but actual execution of this policy has been uneven this past year. The Philippines must stick to its plans and execute well,” it added.

Government spending increased by 0.4% last year, a significant slowdown from the 4.9% growth recorded in 2022, as the Marcos administration implemented a fiscal consolidation plan to reduce the budget deficit. 

Coinciding with this, construction growth also decelerated to 9% in 2023, down from 12.1% the year before, The Inquirer reports.

President Marcos had pledged to increase infrastructure spending to between 5% and 6% of GDP from 2024 to 2028, aiming for the multiplier effects to drive economic growth to as high as 8% by the end of his six-year term.

Latest government data revealed that the economy grew by 6.3% year-on-year in Q2.

Furthermore, Moody’s Analytics added that there will be an acceleration of growth in Southeast Asia, “supported by trade, investment, consumption, generally stimulatory fiscal policy and, by early next year, easing monetary policy.” 

Increasing global demand for goods is expected to position Vietnam as the fastest-growing economy in the region this year and next, surpassing the Philippines.