Think tank Oxford Economics sees the Philippines and other emerging markets (EMs) continuing to dominate the global growth rate rankings in the next two years.
According to Oxford Economics, the Philippine economy will expand by 13 percent by 2026, which would allow the country to secure the 11th spot in the global growth rate rankings, behind India (17th) and Vietnam (10th).
Notably, the top 25 in the rankings have all been emerging markets, excluding Ireland, since 2019. Oxford Economics expects this trend to continue through 2026.
To recall, the local economy shrank by 9.5 percent during the pandemic (2020). It rebounded in 2021 with a full-year growth rate of 5.6 percent. This further accelerated to 7.6 percent in 2022 and settled to 5.6 percent in 2023.
The Philippine Statistics Authority (PSA) will release the data on the country’s gross domestic product (GDP) growth rate for the fourth quarter of 2024, including the average expansion rate for the year.
For the first nine months of 2024, the country’s economic growth averaged 5.8 percent, following 5.2 percent growth in the third quarter of 2024.
“We are cautious on the EM outlook, but not that pessimistic. We see tough global conditions ahead, given our view of continued dollar strength, a slow path for declining global rates, and tariff risks,” Oxford Economics said, but it also noted that there are “plenty of EM opportunities for corporates and asset managers.”
Still, the “best forecasted GDP growth rates in the next two years are all EMs and other developing economies,” the think tank stressed.
The Philippines, like China and India, is a larger emerging market with “some interesting” investment opportunities, the think tank noted.
Meanwhile, faster-growing frontier markets like Vietnam are gaining attention for their higher trend growth rates, which may provide a buffer against global economic challenges.
Policy easing on growth
The Economic and Social Commission for Asia and the Pacific (ESCAP), in a Jan. 9 report, said that “lower inflation and ongoing monetary easing in many economies could provide a modest boost to global economic activity in 2025.”
“However, uncertainty still looms large, with risks stemming from geopolitical conflicts, rising trade tensions, and elevated borrowing costs in many parts of the world,” ESCAP added.
Governments in the region have implemented tailored policies to mitigate these risks, while subdued inflation prompted many central banks, including the Bangko Sentral ng Pilipinas (BSP), to lower interest rates in 2024.
For 2025, the BSP earlier signaled openness to further trim the key borrowing costs, but a reduction of 100 basis points might be “a bit much,” while a zero cut would be “insufficient.”