The Philippines’ economic growth trajectory continues into 2024, with forecasts projecting a steady expansion between 5% and 6% in GDP, according to global consulting firm McKinsey & Company.
Factors contributing to this optimistic outlook include the resurgence of commercial activities, heightened public infrastructure investments, and the flourishing digital financial services sector.
“We assess there to be there are three potential scenarios for the country’s growth, within 5-6% of GDP”, said Jon Canto, managing partner at McKinsey Philippines.
READ:
Revenge spending in full effect — ING
E-commerce is key driver of growth in digital economy
He noted three potential growth scenarios that have been outlined for the country. The first scenario predicts slower growth at around 4.8%, mainly attributed to challenging conditions that might need high policy rates, potentially stifling private consumption. The second is a soft landing scenario, with a projected GDP growth of approximately 5.2%, could materialize if inflation eases and global conditions remain favorable. And the last is an accelerated growth scenario foresees GDP expanding by around 6.1%, facilitated by declining inflation rates and accommodating public policies aimed at boosting productivity.
Key factors driving the economy
McKinsey also discussed the seven key sectors and themes driving the Philippine economy. In the financial services sector, growth is expected to hover around 5%, slightly lower than the previous year’s 7%. Factors such as financial inclusion, digital adoption, unsecured lending, and prevailing interest rates are identified as pivotal trends. The sector’s expansion hinges on creating supportive frameworks to address the growing demand from underserved populations.
In the energy and power sector, a promising outlook with a projected growth of 7% in 2024 is anticipated. Emphasis is placed on renewable energy, gas, and transmission infrastructure. Upgrading the transmission grid to accommodate intermittent electricity supply, positioning natural gas as a transitional fuel, and fostering investments in exploration and production are highlighted strategies. The increasing momentum of green energy auctions is seen as instrumental in scaling up renewable energy projects.
“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,” Jon said.