The Philippine economy likely experienced faster growth in 2024 compared to the previous year, say economists, driven by strong private consumption and government spending. However, it may fall short of the government's growth target of 6 to 6.5%.

UnionBank's chief economist, Ruben Carlo Asuncion, forecast that the country's GDP growth likely accelerated to 6.1% in the fourth quarter of 2024, bringing the full-year average to 5.9%.

Official data for the fourth quarter and full-year 2024 GDP will be released on 30th January.

Asuncion credited the stronger Q4 performance to multiple factors, such as improved purchasing power from disinflation and an increase in jobs within the services and manufacturing sectors.

In addition, remittances from overseas Filipino workers helped boost consumption amid a weaker Peso, while real loan growth and double-digit increases in government spending also supported overall economic activity, The Philippine Star reports.

However, export underperformance, high vacancy rates in private construction, and the impact of the Marcos administration’s Philippine offshore gaming operator (POGO) ban negatively affected Q4 growth.

Philippine National Bank economist Alvin Arogo anticipates both Q4 and full-year growth to reach 5.8%.

“This rate of economic expansion is faster than 2023’s 5.5%, as strong government spending and its positive impact on public construction likely helped amid a high interest rate environment,” he stated.

Meanwhile, BPI lead economist Jun Neri projected that the economy likely grew by 5.8% in the fourth quarter, driven by slower inflation and a 20% surge in pre-election government spending.

“Investment spending may have also contributed to this, as double-digit growth in bank loans suggests that capital spending remains healthy,” Neri said.

Neri also noted that the GDP data could impact the timing of rate cuts by the Bangko Sentral ng Pilipinas (BSP).

“The possibility of a rate cut in February or April could increase if GDP growth falls significantly below consensus or dips below 5%.”

Neri anticipates that the BSP will reduce rates by 25 basis points twice in 2025, although uncertainties, including external risks, could influence the pace of monetary easing.