Fitch Group's BMI slashes anew 2024 PH economic growth outlook

Fitch Group unit BMI has again downgraded its Philippine economic growth outlook for 2024, following the country's weaker-than-expected performance recorded in the third quarter.

In a commentary, BMI said it now expects the Philippine economy to expand by 5.8% this year, lower than the 6.0% projection it made in August, and the initial projection of 6.2%. This is also lower than the government's downward revised target range of 6.0% to 7.0%.

The adjustment comes after the Philippine economy grew by 5.2% in the third quarter, falling short of what most BMI analysts were expecting at 5.6%, and the consensus at 5.7%.

"The economy must expand by 6.3% in the final quarter just to hit our original forecast. But we think that is a tad too optimistic," BMI said.

"To be clear, we maintain that the Q3 year-on-year performance will likely be the weakest in the sequence, and an acceleration is on the cards," it added.

Among the key drivers that BMI noted were the coordinated fiscal loosening and easing, the renewed acceleration in private consumption, and recovery of household consumption as evidenced by strong import growth.

Risks to the outlook, however, stem from policy decisions of U.S. President-elect Donald Trump, who has consistently stated plans to impose tariffs of up to 20.0% on all goods entering the United States.

Latest data available from the Philippine Statistics Authority (PSA) show that the Philippines imported a total of $11.344-billion worth of goods, and exported $6.257-billion worth of shipments in September 2024.

The United States was the biggest recipient of Philippine exports with $1.08 billion or 17.3% of the total exports in September, while it was the sixth-largest source of imports with $681.33 million.

Moving forward, BMI said it expects growth to pick up to 6.3% in 2025, as it said "a slight acceleration is on the cards on the back of a pick up in domestic activity." — VDV, GMA Integrated News