Strong growth will continue that will underpin the country becoming one of the economic giants by 2033, Finance Secretary Ralph Recto said yesterday.
In his speech at the Philippine Economic Briefing at the Philippine International Convention Center in Pasay City, Recto said global research firms and analysts expect the Philippines to grow by 5.8 to 6.3 percent this year, outperforming ASEAN economies.
For 2025, economic growth is projected to hit 5.9 percent to 6.5 percent.
“This trajectory puts us firmly on course to become a trillion-dollar economy in less than a decade. This means that by 2033, our economy will nearly triple in size, placing us in the league of economic giants like China, Japan, India, and South Korea,” Recto said.
“And we are expected to continue outpacing the growth of Asia’s economic powerhouses in the years to come. Fast forward to 2075, the Philippines will overtake France to become the 14th largest economy in the world,” he said.
150 bps cut seen
Interest rates, meanwhile, may start declining in the third quarter, to continue for the next two years, Recto, who is also a member of the policy-making Monetary Board, said.
“Surely, I don’t expect interest rates to go any higher. The rate may have time to start going down, and maybe 150 basis points (bps) in the next two years,” he said.
Recto expressed optimism on borrowing costs after inflation generally declined to 3.8 percent in April from 8.7 percent in January last year based on data from the Philippine Statistics Authority.
For this month, Recto projected inflation to remain within the BSP’s target band of 2 to 4 percent.
The BSP Monetary Board raises its policy rate to restrain consumption which translates to lower prices of goods and services. Since May 2022, it has hiked the policy rate by 450 basis points to 6.5 percent.
However, Recto agreed with the International Monetary Fund that the BSP Monetary Board must remain hawkish due to lingering inflationary risks.
“We need to be aware that there are still upside risks. These stem from geopolitical tensions, higher commodity prices internationally, and domestically, from demand for higher wages,” IMF Representative to the Philippines Ragnar Gudmundsson said.
“The BSP’s policy is all going to be data dependent. What’s important is you reduce the prices,” Recto added.
BSP Senior Assistant Governor Illuminada Sicat said inflation might exceed the central bank’s target band until July due to those risks.
She projected inflation to return to the target range by September. However, she noted the inflation figure might hit the upper end of the target.
Rice tariff
Recto suggested a 17.5 percent tariff on rice imports from Southeast Asian neighbors, which is half of the existing rate to reduce the commodity’s price in the domestic market.
He said the Tariff Commission will still announce any decision on the matter.
Rice prices in April slightly declined to 23.9 percent from 24.4 percent on an annual growth basis amid the dry weather, according to the statistics authority.
