BSP: Global, Phl economy for rest of 2024 robust

The global economy will likely expand next year as the United States and other advanced economies continue to enliven trade, which can affect positively the country’s economy, the Bangko Sentral ng Pilipinas (BSP) said.

“The US economy is projected to post robust expansion in 2024, partially offsetting the expected growth slowdown in China,” BSP said in its outlook report on Friday.

Citing data from S&P Global Market Intelligence, BSP said economic risks will likely remain “broadly balanced” until 2025.

The risks include the Israel-Hamas war and the Russia-Ukraine war.

S&P now expects the global economy to grow by 2.6 percent this year, faster than the 2.3 percent it estimated in January.

Specifically, the US economy could expand by 2.4 percent from its previous estimate of 1.6 percent.

“The emerging external outlook for 2024 and 2025 is mainly shaped by expectations of steady global economic expansion, with a broadly balanced set of risks to the global growth outlook, and resilient domestic demand for 2024 and 2025, supported partly by key structural reforms,” BSP said.

S&P projects Asia and the Pacific’s economy to grow steady at 4.1 percent this year as many countries in the region could be affected by possibly higher oil prices amid the geopolitical tensions in the Middle East.

However, the Philippine government expects much higher growth at 6 to 7 percent this year due to possibly better inflation and strategic spending toward long-term growth.

The BSP sees lower inflation rates within the year which will increase firms’ production.

“The expected easing of inflation this year is likewise viewed to prop up consumer and investment demand,” it said.

The BSP Monetary Board sees the year’s risk-adjusted inflation forecast to hit 3.8 percent.

However, Board member and Finance Secretary Ralph Recto said inflation rates might decline faster than initially expected if the lower rice tariff on imports is implemented soon.

The BSP aims to stabilize inflation within 2 to 4 percent by adjusting its policy rate.

“These developments, including the pursuit of initiatives aimed at improving physical and social infrastructures, are expected to serve as domestic pull factors supporting the external sector outlook over the near and medium term,” BSP added.

Government programs include public-private partnerships for transport, energy, and water infrastructure, and subsidies to the poorest households through e-wallets.

The government also upskills Filipinos for the fourth industrial revolution which includes artificial intelligence, robotics, and other digital technologies through partnerships between the Department of Trade and Industry, the Technical Education and Skills Development Authority, and the SkillsFuture Singapore, for example.