Philippines Economic Growth Falls Short in Q4, Missing Target
Manila, Philippines - The Philippine economy expanded at a slower-than-expected rate of 5.2% in the fourth quarter of 2024, according to the latest data from the country's statistics agency. This figure falls below the Bloomberg News survey median estimate of 5.5% and matches the 5.2% growth rate recorded in the third quarter.
The weaker-than-expected growth in Q4 dragged down full-year expansion to 5.6%, missing the government's adjusted target of 6.0%-6.5% and economists' forecasts of 5.8%. On a quarterly basis, the economy grew by 1.8%, also below estimates.
Officials have attributed the slowdown to a devastating typhoon season that damaged crops, global uncertainties, and geopolitical tensions that impacted manufacturing. Household consumption, which constitutes around two-thirds of the economy, also grew at a slower pace.
Despite the slowdown, the Philippine government aims to regain growth momentum in 2025, targeting an expansion of at least 6% while maintaining price stability. The latest data is expected to prompt the Bangko Sentral ng Pilipinas (BSP) to consider further interest rate cuts as inflation cools.
"We hope that the rate will support growth," said Undersecretary Rosemarie Edillon of the economic planning agency regarding potential BSP rate cuts. "However, we cannot preempt the decision of policymakers."
In 2024, the BSP reduced interest rates by 75 basis points, bringing borrowing costs to a two-year low. The BSP is scheduled to review its key rate on February 13th. Governor Eli Remolona has indicated that the Philippines still has room to ease monetary policy with borrowing costs remaining restrictive.
"The lower-than-expected GDP growth suggests the BSP could consider further rate cuts to support growth momentum, especially with inflation forecast to stay within target," said Nicholas Mapa, an economist at Metropolitan Bank & Trust Co. in Manila.
The Philippine peso appreciated by 0.1% against the US dollar following the release of the economic data, while the main stock index declined by 0.3%.