World Banks sees slightly lower PH growth in 2024 over extreme weather

Metro Manila, Philippines — The World Bank (WB) slightly revised downwards its outlook on the country’s economic growth this year given the impact of extreme weather.

Its full-year growth forecast is at 5.9% from 6%, according to a report released Tuesday, Dec. 10.

“The downward adjustment for 2024 reflects the impact of climate events that led to softer than expected growth in domestic activity, particularly in Q3 2024,” the lending institution said.

“The country was subject to several typhoons that resulted in significant damages to personal property, public and private infrastructure, and agriculture production,” it added.

The economy grew 5.2% year-on-year in the July-September period, slowing down from 6.4% in the second quarter, and from last year’s 6%.

The agriculture sector contracted by 2.8% in the third quarter.

Economic managers have acknowledged that farm output would still be on the decline in the last quarter, especially after six successive storms in October to November, resulting in billions of pesos in agricultural damage.

The WB said the effects of El Niño, La Niña, and recent typhoons were “unlikely to dampen the medium-term growth prospects due to improving conditions that will support domestic demand and improve the country’s resilience.”

It is projecting an average 6% for the country's economic growth in the medium-term or in 2024 to 2026.

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“Strong growth puts the country on a firmer footing to maintain gains in poverty reduction,” Zafer Mustafaoğlu, World Bank Country director for the Philippines, Malaysia, and Brunei Darussalam, said in a statement.

Mustafaoğlu cited the importance of “[sustaining] proactive measures to protect poor and vulnerable households.”

“Advancing the digital economy, including by encouraging greater adoption of core digital technologies by businesses, can expand the country’s growth potential,” said Jaffar Al-Rikabi, World Bank senior economist.

“Increased digitalization could provide expanded market access, build resilience to economic shocks, and increase the country’s productivity, efficiency, and competitiveness,” he added.

The bank said private consumption is seen to be the main source of growth, forecasting it to expand at an average of 5.4% between 2024 and 2026.

It said private consumption growth would slow to 5% in 2024 due to “elevated” inflation for commodities, especially rice.

“However, it is projected to accelerate to an average of 5.6 percent in 2025-2026, due to steady remittance inflows, low and stable inflation, and strong labor market conditions,” the WB said. “In addition, the continued expansion of credit amid declining interest rates, will bolster private consumption growth.”

The government consumption growth outlook is seen at an average 6.4% between 2024 and 2026.

“Within the Philippines itself, higher inflation could erode people’s incomes and constrain private consumption if it is not well managed,” the WB said. “Adverse weather conditions may also hamper farm production and cause disruptions for tourism, construction, and industrial activities.”