The Asian Development Bank (ADB) on Wednesday kept its economic forecast unchanged at six percent for this year and 6.2 percent in 2025.
ADB said the country will continue to see strong household consumption and growth in exports, especially of electronic products.
“Merchandise exports rebounded, particularly electronic products (about 60 percent of total exports), while services exports remained buoyant, including tourism and business process outsourcing,” it said.
ADB added the business environment in the country will remain robust due to relatively low jobless rates and sustained growth in remittances from overseas Filipino workers or OFWs.
OFW transfers growth continues
According to the Philippine Statistics Authority, OFW remittances grow by about 3 percent each month while the jobless rate declined to 4.1 percent in May from 4.5 percent in January and was slightly up from 4 percent in April.
However, ADB said the Philippines and the rest of Southeast Asia will likely experience moderate food inflation due to the impact of heavy rains on agricultural products during La Niña.
Apart from this, the multinational institution said Southeast Asian economies are threatened by possible trade disruptions due to geopolitical tensions and rate movements by the US Federal Reserve.
“The region’s fundamentals remain strong, but policymakers still need to pay attention to a number of risks that could affect the outlook, from uncertainty related to election outcomes in major economies to interest rate decisions and geopolitical tensions,” ADB said.
Analysts see higher chances of the return of Republican Party’s candidate Donald Trump to the presidency after he faced an assassination attempt in a recent campaign rally. The US presidential elections are set in November.
Trump has been considered a trade protectionist, with a campaign slogan of “America First.”
Meanwhile, some analysts expect the Federal Reserve to wait “a little bit” in cutting its rate which could encourage more investors to place funds away from Asian countries and into US equity and debt markets.
Still, ADB said household consumption will continue to remain strong as the Bangko Sentral ng Pilipinas intensifies monitoring of local inflation and global economic conditions.