Business Bayani PH

The Philippine economy is set to keep growing in 2024, facing challenges like inflation and uncertainty. A study by the Philippine Institute for Development Studies (PIDS) shows a projected growth of 5.5 to 6%. But to keep things on track, the study underlines the need for stable policies and smart investments.

Titled “Macroeconomic Outlook of the Philippines in 2023–2024: Prospects and Perils,” the PIDS study, led by Margarita Debuque-Gonzales and analysts Mark Gerald Ruiz and Ramona Maria Miral, looks at the country’s economic performance and future possibilities.

In 2023, the Philippines saw a 5.2% growth as the economy reopened. Looking at 2024, there’s a prediction of a bit slower growth, but it stays within the government’s target range, showing resilience to global challenges.

The study points out that domestic consumption will be a key growth factor in 2024. This will be supported by remittances from overseas Filipinos, rising wages, and more jobs. This strong local demand is expected to help offset challenges from a weaker global outlook.

In terms of inflation, relief is expected in 2024. After averaging 6% in 2023 due to supply-chain issues, inflation is predicted to fall within the Central Bank’s target range of 3% this year. Factors like easing commodity pressure and base effects contribute to this decline.

However, the study also highlights potential risks. It stresses the importance of keeping the Central Bank independent and focused on controlling inflation. Confusing messages and poorly timed monetary decisions could bring challenges that need careful attention.

Concerns are also raised about possible delays in fiscal policy reforms, especially detailing the country’s medium-term fiscal framework (MTFF). The authors urge a clear approach to fiscal sustainability, asking for clarity on extra revenues from new laws and when deficit-reducing measures will happen.

The study also points out the importance of managing the newly established Maharlika Investment Fund. Its success depends on good governance and clear objectives. Appointing a credible board and professional management team is crucial to avoid political interference.

Reiterating previous advice, the authors stress the need to control inflation without hurting growth, manage exchange rate volatility while staying flexible, rebuild fiscal space, and invest in infrastructure and human capital.

In conclusion, the study emphasizes the importance of effective policy responses to risks and sticking to sound economic policies. These are crucial to ensure sustainable growth and development in the Philippines in 2024.◼