Philippines Economic Update, December 2024

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The Philippines is projected to grow at an average of 6.0 percent annually from 2024 to 2026, supported by robust domestic demand, sustained public investment, and a dynamic services sector [19] - The Human Capital Index (HCI) for the Philippines is estimated at 0.52, indicating that children are not reaching their full potential, particularly in early years outcomes [19] - Poverty incidence is projected to decrease from 15.5 percent in 2023 to 11.3 percent by 2026, supported by robust economic growth and rising real household incomes [19] Summary by Sections Recent Economic and Policy Developments - The Philippines experienced GDP growth of 5.8 percent in Q1-Q3 2024, up from 5.6 percent in the same period in 2023, driven by services and public investment [18] - Inflation averaged 3.2 percent in the first eleven months of 2024, down from 6.2 percent a year ago, allowing for monetary easing [18] - The fiscal deficit fell to 5.1 percent of GDP in the first three quarters of 2024, supported by increased revenue collection [18] Outlook and Risks - The medium-term economic outlook remains strong despite a downward revision of the 2024 growth forecast to 5.9 percent due to climate-related events [19] - The balance of risks is tilted to the downside, with uncertainties surrounding external trade and domestic inflationary pressures [19] Empowering Early Years Workers - Early years workers are essential for building human capital and driving economic growth, but face challenges such as shortages and inadequate qualifications [19] - Recommendations include targeted training programs, performance-based grants for local government units (LGUs), and improved coordination between national and local governments [21]