Philippines to become top performer in Asean - HSBC

‘Philippines set to become top performer in Asean’

Story by Keisha Ta-Asan 
Philstar Global
02 November 2024

MANILA, Philippines — The Philippines will soon emerge as the top economic performer in the Association of Southeast Asian Nations (ASEAN), thanks to reforms that have strengthened the country’s global trade position and growth potential, according to HSBC Global Research.

HSBC economist for ASEAN Aris Dacanay said reforms in the Philippines have made the country more influential in the global economy as its share to global trade has risen by 0.11 percentage points since 2018, the second highest in the region.

"In the next five years, we believe that the Philippines could become ASEAN’s leading performer. Growth was averaging 6.5 percent prior to the COVID pandemic,” Dacanay said.

“In 2025 and 2026, we expect that the Philippines will be the second fastest growing economy in ASEAN behind Vietnam and the third fastest in Asia,” he added.

Dacanay cited the International Monetary Fund’s latest World Economic Outlook, in which the IMF projects the Philippines becoming the 28th largest economy by 2029, an improvement from the 33rd rank today.

If realized, the five-place jump will represent the most significant ranking improvement among ASEAN economies.

The Philippine economy posted a growth of 6.3 percent in the second quarter, up from 4.3 percent a year ago and the revised 5.8 percent growth in the first quarter of 2024. In the first half, growth averaged six percent.

According to Dacanay, the country embarked on a series of fiscal, structural and institutional reforms over the past two decades.

“From liberalization, fiscal and institutional reform, we think the Philippines has one of the strongest reform narratives in ASEAN, giving the economy the stability it needs for take-off,” he said.

He noted that successive administrations have contributed to building this foundation, including the Macapagal administrations fiscal reforms and trade agreements, the Aquino administrations Sin Tax Law and institutional improvements, Dutertes focus on fiscal and infrastructure advancements as well as ongoing liberalization and fiscal reforms under the current administration.

The key reforms to monitor in the next five years should be the tax reform on passive income and financial instruments as well as the rationalization of Military and Uniformed Personnel pensions.

“These reforms should help bolster the economy's fiscal coffers further, accelerating the countrys fiscal consolidation efforts while generating resources needed for further growth, Dacanay said.

The HSBC economist also sees numerous opportunities for investment in the country as economic demand grows.

He said the incremental increase in demand in the economy is expected to average $45 billion annually from 2024 to 2029, marking the second highest in ASEAN.

This shows that investors have a significant demand to cater to and work with.

But despite the optimistic outlook for demand, Dacanay said the Philippines is one of the least leveraged in ASEAN, with bank credit to the private sector at just 69 percent of gross domestic product.

“We think this implies that there is significant potential opportunity for investors and entrepreneurs to participate in the Philippines’ robust growth narrative,” he said.

Philippines remains net creditor to IMF

Philippines remains net creditor to IMF

Ian Nicolas P. Cigaral
Inquirer.net
22 August 2024

The Philippines has maintained its status as net creditor to the International Monetary Fund (IMF), thanks to the country’s “strong external position” that allows it to continue to lend more than it borrows from the multilateral institution, the Bangko Sentral ng Pilipinas (BSP) said.

In a statement on Wednesday, the BSP said the powerful Monetary Board had approved the continued participation of the Philippines in the Financial Transaction Plan (FTP) of the IMF for the period of August 2024 to January 2025.

The FTP is a currency exchange arrangement between the IMF and eligible members to facilitate the Washington-based institution’s lending operations with other member countries. The IMF pays interest to FTP participants like the Philippines.

“Given that the country’s external position remains strong, with ample gross international reserves to withstand external shocks, the country has been assessed to be eligible for continued participation in the FTP,” the BSP said.

“This puts the Philippines in a favorable position to remain as a Fund financial partner, which is an indication of the country’s commitment to contribute to the global financial safety nets and support the resolution of possible crises,” it added.

In selecting member countries for inclusion in the FTP, the IMF considers the strength of balance of payments (BoP) and reserve position, as well as the stability of the exchange and financial markets. The IMF also looks into the adequacy of international reserve assets to ensure that obligations will be fulfilled during the specified FTP period.

Latest central bank data showed that the Philippines has a seven-month BoP surplus of $1.5 billion, approaching the $1.6 billion dollar windfall for the entire 2024.

That, in turn, translated to a gross international reserve (GIR) of $106.7 billion as of July, from $105.2 billion in June.

The BSP’s reserve assets consist of foreign investments, gold, foreign exchange, reserve position in the IMF and special drawing rights. The GIR serves as the country’s buffer fund during extreme economic conditions when there are no export earnings or foreign loans.

By convention, GIR is viewed to be adequate if it can finance at least three months’ worth of the country’s imports of goods and payments of services and primary income. The BSP said the amount of buffer funds as of July could cover 7.9 months’ worth of imports of goods, way above global standards.

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.

IMF: Philippines is expected to be the fastest growing economy in Southeast Asia

IMF: Philippines growth fastest in ASEAN, 2nd in Asia

Story by Keisha Ta-Asan

PhilStar Global

17 July 2024

MANILA, Philippines — The Philippines is expected to be the fastest growing economy in Southeast Asia and second fastest in Asia over the next two years, according to the latest World Economic Outlook released by the International Monetary Fund (IMF).

Based on the latest economic outlook update, the IMF maintained its six percent gross domestic product (GDP) growth forecast for the Philippines this year.

If realized, the country’s economic growth would be the fastest among members of the Association of Southeast Asian Nations (ASEAN) and the second-fastest among selected Asian economies, following India’s seven percent.

The Philippines is projected to surpass China (five percent), Indonesia (five percent), Malaysia (4.4 percent), Kazakhstan (3.5 percent) and Iran (3.3 percent) in terms of GDP growth this year.

It will also be above Thailand (2.9 percent), Egypt (2.7 percent), South Korea (2.5 percent), Pakistan (two percent), Saudi Arabia (1.7 percent) and Japan (0.7 percent).

For next year, the IMF expects the Philippine economy to grow by 6.2 percent. The growth target will also be the fastest in ASEAN and second-fastest among Asian economies, behind India’s 6.5 percent.

The latest growth forecasts will also be above the projections of the IMF for the ASEAN-5, which is composed of the Philippines, Vietnam, Indonesia, Thailand and Malaysia. It sees the region growing by 4.5 percent this year and 4.6 percent next year.

“Asia’s emerging market economies remain the main engine for the global economy,” the multilateral lender said, adding that robust growth in India and China will account for half of global growth this year.

“Yet prospects for the next five years remain weak, largely because of waning momentum in emerging Asia,” the IMF said.

Earlier in June, the IMF lowered its growth forecast for the Philippines to six percent this year from the 6.2 percent forecast it gave in its April World Economic Outlook mainly due to the slower than expected growth in the first quarter.

Still, GDP growth is expected to pick up in 2025 amid continued pickup in domestic demand, investment and consumption, IMF mission chief Elif Arbatli Saxegaard earlier said.

Stable inflation and easing monetary policy would also help support the economy next year, she said.

The IMF forecasts inflation to average 3.4 percent this year, lower than the six percent full-year inflation in 2023. It is also below the 3.8 percent risk-adjusted forecast of the Philippine central bank.

IMF more bullish on Philippines growth outlook

IMF upgrades Philippines growth forecasts

Story by Keisha Ta-Asan
Philstar Global
17 April 2024

MANILA, Philippines — The International Monetary Fund (IMF) turned more bullish on its growth outlook for the Philippines in the next two years amid expectations of stronger consumer demand and investments.

Based on its April 2024 World Economic Outlook (WEO), the IMF slightly revised its gross domestic product (GDP) growth forecast for the Philippines to 6.2 percent this year.

“Real GDP growth for 2024 was revised slightly to 6.2 percent from the January WEO forecast of six percent, reflecting carryover from a better-than-expected outturn in the last quarter of 2023,” IMF resident representative Ragnar Gudmundsson said in an email to The STAR.

The latest IMF forecast would hit the government’s six to seven percent goal for this year, penned by economic managers through the Development Budget Coordination Committee. It would also be significantly higher than the 5.5 percent expansion in 2023.

The Philippines is expected to be the fastest growing economy in the region, exceeding Indonesia’s five percent, Malaysia’s 4.4 percent, Thailand’s 2.7 percent and Singapore’s 2.1 percent.

This year’s growth target is also higher than the 4.5 percent growth forecast for the entire Association of Southeast Asian Nations (ASEAN), a downgrade from the previous projection of 4.7 percent.

For 2025, the IMF sees the Philippine economy expanding by 6.2 percent, up from 6.1 percent previously. The Philippines would still be the fastest in the region that year.

“Over the medium term, structural reforms to close infrastructure and education gaps, attract greater FDI (foreign direct investment), and harness benefits from the digital economy should help realize a growth potential of about 6-6.5 percent,” Gudmundsson said.

“These reforms should be complemented by strengthening existing social protection schemes and addressing climate change through a more integrated strategy that includes a carbon pricing scheme,” he added.

The IMF also sees the global economy growing by 3.2 percent both in 2024 and 2025. The 2024 growth target was upgraded from 3.1 percent previously, but the 2025 GDP forecast was retained.

“Nevertheless, the projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8 percent, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth,” the IMF said.

Inflation in the Philippines is expected to average 3.6 percent this year before easing further to three percent in 2025. Both projections are lower than the six percent full-year inflation in 2023.

Gudmundsson said monthly headline inflation would gradually approach three percent in the second half of 2024, hitting the midpoint of the two to four percent target of the Bangko Sentral ng Pilipinas (BSP).

However, risks continue to cloud the outlook as a spike in food or fuel prices could lead to increased inflationary pressure for higher wage hikes and persistence in core inflation, he said.

“The BSP should maintain a sufficiently restrictive monetary policy stance until inflation fully returns to target. Scope for a gradual reduction in the policy rate could emerge later this year, provided that inflation expectations are firmly anchored and upside risks to the inflation outlook do not materialize,” he said.

Inflation accelerated to 3.7 percent in March from 3.4 percent in February, marking its second straight month of uptick. This prompted the BSP to keep borrowing costs elevated after it raised interest rates by 450 basis points from May 2022 to October 2023.

The BSP has emerged as the most aggressive central bank in the region after hiking interest rates by 350 basis points in 2022 and by another 100 basis points in 2023 to tame inflation.