AMRO cuts Philippines growth forecasts

The ASEAN+3 Macroeconomic Research Office (AMRO) cut the Philippines’ 2024 GDP growth forecast to 4.1%, down from its April projection of 5.3%, due to higher inflation pressures linked to the prolonged Middle East conflict. The update, released in an interim regional economic outlook, also lowered the 2025 growth forecast to 4.4% and trimmed the 2027 GDP projection to 5.5%, below the government’s 5.5-6.5% target for that year. First-quarter growth slowed to 2.8%, the weakest since early 2021, as rising prices and a flood control controversy dampened consumer spending and investment. AMRO now expects inflation to hit 6% in 2024—up from its prior forecast of 3.9%—and 4.1% in 2025, following April’s 7.2% spike, the highest in over three years. The revision reflects broader regional trends, with AMRO warning that inflation pass-through risks weakening domestic demand in the Philippines and Vietnam. Chief economist Dong He noted that energy and transport cost increases are straining supply chains, while persistent Middle East conflict risks further economic strain. Under a high-oil-price scenario ($125/barrel vs. the baseline $95), ASEAN+3 growth could slow to 2.5% with inflation peaking at 3.5%. AMRO maintained its 2024-2025 regional growth forecast at 4% but raised inflation expectations for ASEAN+3 to 1.8% this year and 1.5% in 2025. He urged targeted policy support and long-term efforts to bolster energy security and supply-chain resilience. The downgrades highlight vulnerabilities as global tensions disrupt trade and fuel costs.