Moody’s Analytics has revised higher its Philippine gross domestic product (GDP) growth forecast to 5.9 percent for 2024 and 2025 from its earlier 5.8 percent estimate announced in February.

In an April 12 APAC (Asia Pacific) Outlook report, it noted that the Philippines along with Vietnam and Indonesia will lead the region in terms of economic performance this year and in 2025. However, the 5.9 percent forecast is lower than the government’s recently revised 2024 GDP target of six percent to seven percent and 6.5 percent to 7.5 percent for 2025.

For 2026, Moody’s Analytics which is also referred to as Moody's, forecasts Philippine GDP will grow by 6.1 percent, still lower than the Marcos administration’s growth target of 6.5 percent to eight percent for 2026 until 2028.

“Economies in South and Southeast Asia will see some of the strongest output gains this year, but their performance is flattered by a delayed post-pandemic rebound,” said Moody’s.

It projects that the ASEAN group of countries will grow 4.5 percent after four percent in 2023 with “Vietnam, the Philippines and Indonesia leading the pack at growth rates of 5% or more.”

With the adjusted growth rate, Moody’s also expects Philippine inflation for this year to average 3.5 percent, 3.2 percent for 2025 and a flat three percent for 2026. The Bangko Sentral ng Pilipinas expects a higher risk-adjusted inflation forecast for 2024 of four percent and 3.5 percent projection for 2025.

“Inflation is past its peak in developed Asia—which includes Japan, South Korea, Taiwan, Singapore and Hong Kong—and in developing Southeast Asia—which includes Indonesia, Philippines, Vietnam, Thailand and Malaysia,” said Moody’s.

It added that headline inflation in developed Asia “has moderated in large part thanks to lower global prices for oil and gas, which these countries need to import.”

“Developing Southeast Asia, on the other hand, has benefited from slowing inflation for food, which makes up a larger share of household spending in this part of the region than in developed Asia,” said Moody’s.

It also said that inflation across the Asia Pacific region “is coming down, but progress has been choppy, and there is a risk that inflation will exceed expectations.”

Generally, Moody’s consider the Asia Pacific region as doing better than other regions although conditions are different per country.

The Asia Pacific economy is expected to grow by 3.8 percent this year, which compares with growth of 2.5 percent for the world economy, according to Moody’s.

As to monetary policies across the region, Moody’s said central banks are not expected to “leapfrog” the US Federal Reserve on rate cuts, but “the possibility that they will err on policy that is too tight is an important concern.”

“As inflation moderates and domestic conditions remain soft in much of the region, attention is turning towards when APAC central banks will start easing monetary settings,” the report said. Attention is on the timing of the US Fed rate cuts.

“We donʼt expect central banks in APAC to leapfrog the Fed. We anticipate that policymakers will keep monetary settings unchanged for the time being. With the exception of Vietnamʼs central bank, which cut rates last year, no central bank in the APAC region has lowered interest rates. This is because of fear that an early pivot could fuel currency depreciation,” said Moody’s.