Philippine economic growth is expected to reach over 6 percent this year and in 2025, driven by government spending and the growth in services exports, according to the ASEAN+3 Macroeconomic Research Office (AMRO).

In the latest October 2024 ASEAN+3 Regional Economic Outlook update released on Thursday, AMRO maintained the Philippine economic growth outlook at 6.1 percent for 2024 and 6.3 percent for 2025.

The report showed that the forecast for this year is the second highest in the region, next to Vietnam’s 6.2 percent and 6.6 percent economic growth projection for 2024 and 2025.

In a virtual briefing, AMRO chief economist Hoe Ee Khor said the forecast is “still among the strongest in the region.”

“We didn’t change the forecast for the Philippines. We expect growth to be 6.1% which will be an improvement from last year’s 5.6% and for next year, 6.3% and this is mainly because we expect government investment spending to be higher this year, together with services exports,” Khor said.

“So like most of the other countries, the Philippines went through a rough patch last year, the interest rate was pretty high. The governor has cut interest rates by 25 basis points, and it’s indicated for another cut later this month,” he said.

The Monetary Board of the Bangko Sentral ng Pilipinas earlier reduced key interest rates by 25 basis points to 6.25 percent, noting that the balance of risks to the inflation were tilted toward the downside for this year and in 2025.

“The governor himself indicated that there’s potential for further cuts of 25 basis points, but he’s going to wait until and look at the numbers on inflation,” Khor said.

Inflation accelerated to 4.4 percent in July but eased to 3.3 percent in August.

The September inflation data will be released by the Philippine Statistics Authority this Friday, but the BSP earlier said it expects inflation to further go down to 2.0 to 2.8 percent.

AMRO, meanwhile, expects the country’s inflation to settle at 3.3 percent for 2024 and further decelerate to 3.1 percent in 2025.

“So far, inflation has behaved pretty well. It spiked up in July, and then it came back, came back down in August, and our expectation is to continue to trend down and for the whole year,” Khor said.

Khor said the easing inflation will allow the BSP to further reduce policy rates this year. (PNA)