ADB retains 2024, 2025 PH economic growth forecast

ADB retains 2024, 2025 PH economic growth forecast

Story by TED CORDERO
GMA Integrated News
25 September 2024

The Asian Development Bank (ADB) has maintained its economic growth forecast for the Philippines this year and 2025 as it expects monetary easing and decelerating inflation to drive growth.

In the September edition of its flagship publication, Asian Development Outlook (ADO), the ADB said the growth forecast for the country’s gross domestic product (GDP) was unchanged from the July edition, at 6% for 2024 and 6.2% for 2025. 

“Moderating inflation, monetary easing, and sustained public spending, particularly on major infrastructure projects, will support Philippine economic growth this year and the next,“ the Manila-based multilateral lending said.

The ADB’s figures fall within the lower end of the Marcos administration’s GDP target range of 6% to 7% for the year and 6.5% to 7.5% for next year.

“The expansion in gross domestic product will be driven by broad-based domestic demand, supported by lower inflation and interest rates,” the lender said.

The Philippines posted a growth rate of 6.3% in the second quarter of 2024—the fastest in five quarters—on the back of strong consumption activities.

The ADB also lowered its inflation forecast to 3.6% in 2024 from its April estimate of 3.8%, reflecting the sustained deceleration in food prices partly due to lower tariffs on rice imports.

Inflation is expected to ease further to 3.2% in 2025 compared to the previous estimate of 3.4%, according to the lender.

“Most of the ingredients for the Philippines’ sustained economic growth are in place—rising government revenues are boosting public expenditures on infrastructure and social services, increasing employment is driving consumption, and reforms to open the economy to more investments are underway. With inflation slowing, the country is in a strong position to lead growth in Southeast Asia,” said ADB Philippines country director Pavit Ramachandran.

The bank said risks remain due to potential severe weather events, which could drive inflation higher.

“External factors such as a sharper slowdown in major advanced economies and the People’s Republic of China, financial volatility due to US monetary policy decisions, geopolitical tensions, and rising global commodity prices also pose threats to growth,” the ADB said.

The bank cited the government’s public infrastructure spending, which is seen to range between 5% and 6% of GDP annually from 2024 to 2028, after hitting 5.8% of GDP in 2023.

The government’s “Build Better More” infrastructure program includes 66 ongoing projects and another 31 approved for implementation as of August 2024.

“The infrastructure program aims to enhance physical connectivity through railways, bridges, and airports, or strengthen water management through irrigation, water supply, and flood control,” the ADB said.

“Climate change mitigation and adaptation, digital connectivity, energy, and agriculture projects are also prioritized under this program,” it added.

The ADB said it is financing key infrastructure projects, such as the Malolos Clark Railway Project and the South Commuter Railway Project, which will link Metro Manila to northern and southern provinces in Luzon.

The bank is also supporting the Bataan-Cavite Interlink Bridge Project and the Integrated Flood Resilience and Adaptation Project, which aim to enhance flood and climate change resilience in three major river basins in the country.  —VBL, GMA Integrated News

BBM era ushers in economic boom

Marcos Jr. era ushers in economic boom: Philippines’ over 6% growth outpaces Southeast Asian neighbors

BILYONARYO.COM
July 17, 2024

The Philippine economy has clocked more than 6 percent growth since President Ferdinand Marcos Jr. took office in 2022.

According to Marcos’ economic managers, the average growth rate hit 6.1% from the third quarter of 2022 to the first quarter this year, eclipsing regional peers like Indonesia, Malaysia, Singapore, and Thailand.

This momentum is expected to carry through 2024 and 2025, with the Development Budget Coordination Committee forecasting a growth range of 6.0-7.0 percent and 6.5-7.5 percent, respectively.

The IMF and ADB echo this optimism, both projecting at least 6 percent growth for the Philippines in the next two years.

Domestic demand and a rebound in merchandise exports, particularly electronics, fueled the 5.7 percent growth in the first quarter.

Continued infrastructure spending and buoyant service exports, including tourism and business process outsourcing, also played a role.

However, National Economic and Development Authority Secretary Arsenio Balisacan cautioned that long-term sustainability hinges on infrastructure development and economic diversification.

The government’s Philippine Development Plan (PDP) 2023-2028 prioritizes infrastructure investment to create jobs, boost competitiveness, and improve regional connectivity.

Balisacan highlighted the “Build Better More” program’s 185 flagship infrastructure projects, valued at P9.54 trillion as crucial for achieving the 5-6% annual infrastructure spending target.

The program has seen three project completions so far, with 63 underway, 31 approved, and others in various stages of development.

ADB: PH to post the highest growth in ASEAN

Philippines to lead ASEAN in growth – ADB

Story by Louella Desiderio 

18 July 2024

MANILA, Philippines — The Philippine economy is expected to post the fastest growth in Southeast Asia this year and next, according to the Asian Development Bank (ADB). The Asian Development Outlook July report released yesterday showed that the multilateral lender has retained its growth outlook for the Philippines for this year and 2025. 

In particular, the ADB expects the Philippines’ gross domestic product (GDP) growth for this year at six percent, unchanged from the forecast it provided last April.

This forecast is at the low end of the government’s six to seven percent economic growth goal for the year.

ADB’s GDP growth forecast for the Philippines, if realized, will make the country the fastest growing economy along with Vietnam in Southeast Asia.

The ADB expects lower GDP growth rates in other countries in the region such as Indonesia (five percent), Malaysia (4.5 percent), Thailand (2.6 percent) and Singapore (2.4 percent).

The ADB also kept its economic growth forecast for the Philippines at 6.2 percent for 2025.

This forecast is lower than the government’s 6.5 to 7.5 percent GDP growth target for next year.

Based on its projections, the ADB expects the Philippines and Vietnam to have the highest economic growth rates in Southeast Asia next year.

Philippine GDP growth was at 5.7 percent in the first quarter of the year, slower than the 6.4 percent expansion in the same period last year, but faster than the 5.5 percent growth in the fourth quarter of last year.

The country’s first quarter economic growth was supported by domestic demand, along with a recovery in merchandise exports.

ADB’s report also showed inflation forecasts for the Philippines were untouched at 3.8 percent this year and 3.4 percent next year, both within the central bank’s two to four percent target range.

Inflation in June eased to 3.7 percent, snapping four months of acceleration amid slower upticks in energy and transport costs.

From January to June, inflation averaged 3.5 percent, within the two to four percent target of the Bangko Sentral ng Pilipinas (BSP).

“Moderating inflation and expected monetary easing in the second half of 2024 will support household consumption and investment,” the ADB said.

In contrast to the ADB’s optimistic view, the Association of Southeast Asian Nations Plus 3 (ASEAN+3) Macroeconomic Research Office (AMRO) trimmed its growth outlook for the Philippines for this year and in 2025.

AMRO’s Quarterly Update of the ASEAN+3 Regional Economic Outlook report released on Monday showed that the Philippine economy is expected to post 6.1 percent growth this year, down from the previous forecast of 6.3 percent.

The revised 2024 GDP forecast for the Philippines, however, is within the government’s six to seven percent economic growth target for the year.

AMRO chief economist Hoe Ee Khor said in an online briefing that the economic growth forecast for the Philippines was shaved in light of recent data.

For 2025, AMRO also cut its economic growth forecast for the Philippines to 6.3 percent from 6.5 percent previously.

This new forecast is below the 6.5 to 7.5 percent growth goal set by the government for next year.

Khor said AMRO also trimmed the growth forecasts for many of the countries in the region as the recovery in the external sector is turning out to be weaker than expected.

Philippines emerges as Southeast Asia renewable power pacesetter

Philippines emerges as Southeast Asia renewable power pacesetter

BY SING YEE ONG AND DITAS LOPEZ

BLOOMBERG

22 June 2024

The Philippines has leapfrogged its Southeast Asian neighbors to become a regional leader in planned clean-power projects as fewer investment restrictions and green-minded policies attract domestic and foreign cash.

The energy transition in coal-dependent emerging nations like the Philippines will determine the success of global efforts to hit net zero targets and curb the worst impacts of climate change. | BLOOMBERG

Changes including allowing full foreign ownership of renewable energy projects have already helped secure a pipeline of 99 gigawatts of wind and solar developments. That’s more than enough power to supply all Philippine households, and is ahead of Vietnam at 86 gigawatts and about five times higher than in Indonesia.

The energy transition in coal-dependent emerging nations like the Philippines will determine the success of global efforts to hit net zero targets and curb the worst impacts of climate change. Many middle-income nations are struggling, however, to balance the shift away from fossil fuels with growing energy demand and the need for economic growth.

Only 3% of the Philippines’ ambitious renewables pipeline is currently under construction. But it’s a step toward meeting the country’s goal of boosting the share of renewables in its electricity mix to more than a third by the end of the decade from about a fifth now.

At a clean energy forum in Manila last month, companies like Oslo-based renewables developer Scatec ASA were enthusiastic about the Philippines’ potential, especially in contrast with its neighbors where funding and regulatory issues have held back progress.

"In many of the other markets, there are still regulatory challenges,” said Scatec Chief Executive Officer Terje Pilskog. "But in the Philippines we see lots of opportunities to continue to grow.”

Other companies involved in renewables projects in the country include Japan’s Advantec, Singapore-based Vena Energy and local firms Citicore Renewable Energy Corporation and SP New Energy Corporation.

Successive governments in the Southeast Asia’s second-biggest country by population have relaxed restrictions for large-scale power projects. The Philippines has in recent years released an offshore wind development strategy, offered tariff and tax incentives, and opened the renewables sector to full foreign ownership. All this helped spur a 41% jump in clean energy investment to $1.3 billion in 2022 from the year before, according to BloombergNEF.

Interest from renewable developers has accelerated in recent years due to falling equipment costs and the domestic power sector becoming more familiar with how to build and operate facilities, said Lawrence Fernandez, head of utility economics at Manila Electric, the country’s biggest power retailer.

Solar panels on the rooftop of a mall in Quezon city, Metro Manila. Successive governments in the Philippines have relaxed restrictions for large-scale power projects. | REUTERS

Unlike many of its neighbors, where state-owned entities dominate power markets, the Philippines allows private firms to take part in the generation and sale of electricity.

"There is no single state entity which is a dominant player and that has allowed innovation to flourish,” said Ramnath Iyer, research lead for sustainable finance in Asia at the Institute for Energy Economics and Financial Analysis. Clear rules welcoming foreign investment make companies more comfortable putting money into the country, he said.

The Philippines has also mandated that electricity suppliers must increase energy from renewable sources by at least 2.52% every year from 2023, up from 1% a year in 2020. That was a crucial policy, according to Eric Francia, CEO of Philippine conglomerate Ayala’s energy unit ACEN Corp., and "should be enough to incentivize or motivate us to build more renewable energy plants.”

While investment in renewables capacity is projected to rise in most of the region over the next five years, the Philippines and Malaysia are set to lead that growth, while current front-runner Vietnam will see a drop, according to analytics firm Wood Mackenzie.

To truly accelerate its energy transition, however, the Philippines will have to surmount an array of challenges including the need to extend transmission lines to distribute power across the archipelago of more than 7,000 islands. It will also need to expand its grid capacity, boost storage and streamline the land permitting process.

Despite those challenges, the policy certainty in the Philippines has helped the country "leapfrog” over regional peers, said Ramesh Subramaniam, director general at the Asian Development Bank.

That’s despite Vietnam and Indonesia signing up to receive billions of dollars from Group of Seven Just Energy Transition Partnership deals, which were designed to finance their transition from coal and bring forward peak-emissions dates. The projects have faltered, however, because of restrictions on how the money can be spent, counterproductive local regulations, and insufficient technical preparation on the ground.

Such complications mean the region’s biggest polluters are likely to see emissions rise until well into the 2030s, according to BNEF, making room for the Philippines to spearhead renewable generation growth in Southeast Asia.

The country’s success is far from assured, however.

Without proper execution, projects might face delays, and the government needs to ensure there’s sufficient grid capacity from where the power is being generated, said the energy institutes’ Iyer. "The auctions have been done, projects have been awarded. Now the work has got to be done,” he said.

Queen Maxima of the Netherlands to visit Philippines

Queen Maxima to visit Philippines, to push financial inclusion

Story by Michael Punongbayan
Philstar Global
18 May 2024

MANILA, Philippines — Queen Máxima of the Netherlands is scheduled to visit Manila next week in her capacity as United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA).

She is expected to stay from May 21 to 23 and meet with President Marcos and top finance officials.

The visit will focus on advancing key foundational building blocks for financial inclusion – including connectivity, digital identification and digital payments – as well as enhancing financial health and resilience against economic and climate-related challenges for Filipinos.

In recent years, the Philippines has seen considerable progress in financial access, with the proportion of adults owning a bank account rising from 26.6 percent in 2011 to 51.4 percent in 2021, as reported by the World Bank Global Findex.

However, despite these gains, data also show that the Philippines still has approximately 37.6 million unbanked adults, with the Findex data also highlighting significant concerns about financial resilience among Filipinos.

The primary financial worry for 42 percent of adults is covering medical costs in the event of a serious illness or accident, followed by concerns over managing monthly expenses (24 percent) and securing funds for old age (17 percent).

The Special Advocate will also learn about a tech-enabled platform that empowers small sari-sari storeowners to grow their businesses, digitize their operations and integrate into large supply chains.

Apart from President Marcos, Queen Maxima will have high-level meetings with Finance Secretary Ralph Recto, Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. and other key policymakers and leaders for discussions aimed at fostering partnerships and support continuous innovations in the financial sector.

Queen Máxima will also meet with Asian Development Bank president Masatsugu Asakawa to explore collaborative opportunities at a regional level.

Additionally, a focus group discussion with a diverse contingent of female financial users will provide insights into how financial products can effectively address the needs of women and enhance their financial health.

Another highlight of the visit will be a demonstration of the Co-Develop’s South-East Asia Center for Digital Public Infrastructure at Ateneo de Manila University.

By sharing insights and forging connections between global financial initiatives and local realities, the UNSGSA visit aims to inspire continued progress and innovation in the Philippines’ financial sector.

Queen Maxima, also in her capacity as the UNSGSA, previously visited the Philippines from June 29 to July 1 in 2015.

Philippines contributes $3 million to ADF

Philippines contributes $3 million to ADF

Story by Louise Maureen Simeon

Philstar Global 

05 May 2024

TBILISI – The Philippines is providing $3 million (P171 million) to the Asian Development Bank (ADB) fund meant to help poor and vulnerable economies in Asia-Pacific.

In a briefing here on the sidelines of the 57th ADB Annual Meeting, ADB president Masatsugu Asakawa said the bank and several donor countries have agreed to replenish $5 billion for ADB’s Development Fund (ADF).

As such, the Philippines has donated for the second time roughly $3 million to the ADF, which is being replenished every four years.

The Philippines joins Canada, Georgia, Germany, Hong Kong, China, Indonesia, Italy, Malaysia, New Zealand, Korea and the UK, among others, in this year’s ADF donors.

Finance Undersecretary Joven Balbosa said the Philippines maintained the contribution it released during the pandemic.

Balbosa is representing Finance Secretary Ralph Recto in this year’s ADB Annual Meeting.

“It’s a decent amount because we are also mindful of our fiscal consolidation program and the needs of our country,” Balbosa told reporters.

“But we are an ADB member country, we are a family of nations. It’s just fair that we provide a small share, it’s a balancing act,” he said.

The Philippines used to be a beneficiary of the ADF until it graduated from the status and eventually became eligible for loans.

ADB to finance energy projects in the Philippines

ADB eyes direct financing of renewable energy projects in Philippines

Story by Louise Maureen Simeon 
Philstar Global
05 May 2024

TBILISI — The Asian Development Bank (ADB) is looking at directly engaging with the Philippine government on financing renewable energy (RE) projects as part of its country partnership strategy (CPS) over the medium-term.

In an interview with The STAR here, ADB country director for the Philippines Pavit Ramachandran said RE is an area that the multilateral lender is excited about as it crafts the new CPS.

“It would be a relatively new sector from the sovereign public sector side because as you know, the Philippines is a largely privatized market,” Ramachandran said.

“But given the focus and the policy ambition to increase renewable energy, there’s a lot of other aspects in the sector that need to be also strengthened,” he said.

For now, ADB is doing work with the private sector in terms of RE through loan deals such as the P5.5-billion sustainability-linked loan with ACEN Corp. of the Ayala Group in December last year.

Just last week, ADB also inked a P675-million loan agreement with Buskowitz Solar Inc. for the installation of solar panel systems on commercial and industrial buildings’ rooftops in the Philippines.

However, Ramachandran said ADB has not directly engaged on the sovereign side.

“Transmission capacity needs to be enhanced. You need to have a lot of the associated infrastructure, for example, port development for offshore wind. There’s also a need for de-risking for sectors like geothermal,” Ramachandran said.

“So that’s something we are looking at in these different areas and what would be the appropriate modality and lending scope,” he said.

In the Philippines, the government has been pushing for the use of renewable and indigenous energy sources amid the need to bring down the country’s dependence on energy imports.

Data showed that only 29 percent of the country’s current energy mix comes from renewables. The Department of Energy would like to bring it up to 35 percent by 2030 or to 50 percent by 2040, as outlined in the RE roadmap.

Further, Ramachandran emphasized that human development is another area that ADB will prioritize in the CPS 2024-2029 for the Philippines to fully tap into its demographic potential.

This is in relation to the Philippines’ goal of securing an upper-middle-income status amid the need to secure human capital foundation through education, health and social protection.

Philippines, biggest recipient of financial assistance from ADB

Philippines is top recipient of ADB aid in 2023

Louella Desiderio 
The Philippine Star 
April 30, 2024 

MANILA, Philippines — The Philippines was the biggest recipient of financial assistance from the Asian Development Bank (ADB) in 2023, securing around $8.4 billion.

The multilateral lender’s Annual Report for 2023 showed the Philippines received $4.51 billion worth of financial assistance from the ADB’s ordinary capital resources last year.

In addition, the Philippines received $3.86 billion worth of ADB co-financing with partners for projects and $7.2 million for technical assistance in 2023.

Of the loans received by the Philippines from the ADB last year, $1.01 billion was allocated for the Davao Public Transport Modernization Project, which is expected to serve as a pilot to modernize the country’s public road transport system.

The ADB also provided $650 million worth of loan for the Bataan-Cavite Interlink Bridge – Tranche 1.

Other projects in the Philippines that received loans from the ADB were the Competitive and Inclusive Agriculture Development Program-subprogram 2 ($500 million), Post-COVID-19 Business and Employment Recovery Program-subprogram 1 ($500 million), Build Universal Health Care Program-subprogram 2 ($463 million), Domestic Resource Mobilization Program-subprogram 1 ($400 million), Integrated Flood Resilience and Adaptation – phase 1 ($303.2 million), Inclusive Finance Development Program-subprogram 3 ($300 million) and Infrastructure Preparation and Innovation Facility ($200 million).

Other countries that were part of the biggest recipients of ADB financial assistance and co-financing with partners last year were Bangladesh ($6.58 billion), Indonesia ($5.35 billion) and India ($4.74 billion).

The ADB committed a total of $23.6 billion from its own resources last year to support Asia and the Pacific’s efforts to achieve sustainable development.

This amount included $9.8 billion allocated for climate action.

“ADB continued to step up as the climate bank for Asia and the Pacific, reaching our highest-ever annual financing for climate action,” ADB president Masatsugu Asakawa said.

“Our investments in adaptation and mitigation had a strong focus on climate-resilient agriculture, renewable energy and low-carbon transport,” he said.

Aside from providing financial assistance from its own resources, the ADB also mobilized $16.4 billion in co-financing through its strong partnerships last year.

ADB expects PH to grow in 2024

ADB sees Philippine economy growing by 6% in 2024

Story by TED CORDERO
GMA Integrated News
12 April 2024

The Asian Development Bank (ADB) expects the Philippine economy to grow faster this year in light of slowing inflation and improved domestic demand.

Citing the Manila-based multilateral lender’s flagship publication, Asian Development Outlook (ADO), ADB Philippines country director Pavit Ramachandran said the bank projects the Philippines’ gross domestic product (GDP) to expand by 6% in 2024, faster than the 5.6% growth rate seen in 2023.

The ADB’s forecast falls within the lower end of the Marcos administration’s GDP target range of 6% to 7% for the year.

For 2025, the economic growth rate will pick up further to 6.2%, also falling within the government’s 6.5% to 7.5% target for next year, Ramachandran said. 

In the April edition of the ADO, the bank cited moderating inflation and the consequent monetary easing that would bode well for investments and consumption to pick up as factors for growth this year and next.

The ADB projects inflation to ease to 3.8% in 2024 and 3.4% in 2025, which are within the government’s 2% to 4% target range. The average inflation rate in 2023 stood at 6%.

Decelerating global oil prices and an extension in reduced tariffs on major food items, including rice, corn, and pork, until December 2024 will help contain food inflation, according to the ADO.

However, compared to the December edition of the ADO, the ADB’s 2024 growth outlook was lower than its previous forecast of a 6.2% GDP growth rate. 

“We slightly moderated the forecast [in 2023] when we projected 6.2% for this year,” Ramachandran said.

The ADB’s Philippine head said severe weather conditions such as El Niño and the possible La Niña could contribute to upside inflationary risks.

Likewise, the slowdown in major advanced economies, heightened geopolitical tensions, and higher-than-expected global commodity prices could also weigh on growth, according to the ADO.

Nevertheless, Ramachandran said, “We still see the Philippines as one of the frontrunners in the growth leaderboard in the region, anchored on strong macroeconomic and fiscal policy effectiveness.”

”We believe that the enabling environment is there with the structural reforms [such as] opening a number of strategic sectors to foreign ownership,” he said.

Ramachandran said the Philippines should focus on improving the ease of doing business to attract more investments, as it lags behind its peers in the region in terms of foreign direct investments. 

The ADO said that promoting higher levels of private sector participation in the economy will be vital to further raising growth and productivity.

The report also said that an enhanced public-private partnership (PPP) regulatory framework with the signing last month of the PPP Code of the Philippines Act Implementing Rules and Regulations will help further mobilize private investment for infrastructure development, including green and resilient energy and telecommunications.

Also supporting the Philippines’ growth for 2023 was the low unemployment rate, which would support household spending as “strong retail trade, higher tourist arrivals and receipts, and an expansion in business services will sustain growth in the services sector, which account for over half of gross domestic product and employment.”

The government’s infrastructure initiative would also boost growth as it would attract private sector investments from both local and foreign players.

“The Philippines’ growth momentum is picking up speed, driven by the government’s efforts to improve budget execution, mobilize additional revenue, and pursue reforms to boost the investment climate.

Investments in large public infrastructure projects, as well as much-needed social services, will boost government expenditures and bode well for the economy in the long run,” Ramachandran said.

Under the Marcos administration’s “Build Better More” program, 67 flagship projects are currently underway, with 30 more projects approved as of March 2024.

The program includes bridges, expressways, ports, and railways, among others. 

Some of the projects are funded by ADB, such as the Malolos Clark Railway Project and the South Commuter Railway Project, which will link Metro Manila to northern and southern provinces in Luzon. — VBL, GMA Integrated News