An international business consulting firm projected strong growth for the economy within government  projections of a five percent to six percent gross domestic product, or GDP expansion by the end of the year. 

A new article published by McKinsey & Company titled “The Philippines economy in 2024: Stronger for longer?” gave a projection of significant economic growth despite various global pressures.

The Philippines ended 2023 as the fastest-growing economy in Southeast Asia, with a growth rate of 5.6 percent. 

Solid growth was driven by the resumption in commercial activities, increased public infrastructure spending, and growth in digital financial services, according to McKinsey. 

“We assess three potential scenarios for the country’s growth, within 5 to 6 percent of GDP,” Jon Canto, managing partner at McKinsey Philippines, said. 

The three scenarios projected are:

Slower growth of around 4.8 percent due to challenging conditions that could keep policy rates high and slow down private consumption, resulting in slower long-term growth;

Soft landing with around 5.2 percent GDP growth where inflation moderates, and global conditions turn out to be largely favorable due to a stable investment environment and regional trade demand; and

Accelerated growth at around 6.1 percent of GDP in a scenario where inflation slows, and public policies accommodate aspects such as loosening key policy rates and offering incentive programs to boost productivity.

Seven key sectors and themes are explored in the article, including financial services and energy, are featured with projections and growth drivers. 

Financial services to lead

The sector is expected to grow at about 5 percent in 2024, slightly lower than the approximately 7 percent growth in 2023. 

Financial inclusion, digital adoption, unsecured lending, and elevated interest rates are key trends to watch out for in the sector.

Unlocking growth could rely on supportive frameworks and environment to meet rising demand from the financially underserved.

The outlook for the energy sector is positive, with the potential to grow by seven percent in 2024. Key focus areas include renewable energy, gas, and transmission infrastructure.

Upgrading the transmission grid to make it more flexible and better able to cope with the intermittent electricity supply can be critical as the sector pivots toward renewable energy. 

Positioning natural gas as a transition fuel could stimulate exploration and production investments. Lastly, the increasing momentum of green energy auctions could facilitate the development of renewables at scale, according to the report.

“By focusing on initiatives that could unlock growth in these seven critical sectors and themes, while adapting to the macro-economic scenario that plays out, the Philippines could realize its potential in 2024 and take steps towards achieving longer-term sustainable and inclusive growth,” Canto concluded.