The World Bank Group logo is seen on the building of the Washington-based global development lender in Washington on January 17, 2019. (FILE photo by Eric BARADAT / Agence France-Presse)
The World Bank (WB) on Tuesday trimmed down its 2024 growth outlook on the Philippines to a level that’s short of the government’s target, with powerful typhoons emerging as a major threat to the economy and poverty reduction.
In its latest Philippines Economic Update, the WB said gross domestic product (GDP) this year would grow by 5.9 percent, lower than the previous forecast of 6 percent.
Article continues after this advertisementIf the watered-down projection of the Washington-based institution comes to pass, GDP expansion in 2024 would fail to hit the 6 to 6.5 percent target range of the Marcos administration for this year.
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Article continues after this advertisementWB said the downgrade was triggered by the below-market consensus growth of 5.2 percent in the three months ending in September, which was the weakest reading in more than a year following the onslaught of storms that disrupted government spending and damaged farm output.
Article continues after this advertisementOverall, WB said climate disasters were a big threat not just to growth but also to poverty reduction. Using the $3.65 per day benchmark, latest WB projections showed that poverty incidence would unlikely drop to single-digit levels by 2026, although a downward trend would be sustained.
Article continues after this advertisement”Household income vulnerability, particularly high exposure and vulnerability to climate disasters, may undermine the potential for continued poverty reduction,” the bank said.
”These weather-related shocks have in the past damaged homes, infrastructure and caused disruption to businesses and livelihood,” it added.
Article continues after this advertisementAs it is, the Marcos administration already adjusted its macroeconomic view to account for the disruptions caused by the adverse weather conditions.
Earlier this month, economic managers narrowed their 2024 GDP growth target range to the current level of 6 to 6.5 percent, as they also cited the weak performance in the third quarter.
But the WB said the short-term effects of the recent typhoons and prolonged droughts were unlikely to dampen the country’s medium-term prospects “due to improving conditions that will support domestic demand and improve the country’s resilience.”
The bank penciled in a 6.1-percent GDP growth for 2025, and a 6-percent expansion for 2026. If realized, economic performance would settle within the government’s revised growth target of 6 to 8 percent for next year until the end of President Marcos’ term in 2028.
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“Growth is projected to improve over the forecast periodlegendplay, buoyed by improving conditions for private domestic demand due to lower inflation, easing financial conditions, and recent reforms that will liberalize investment activity,” the WB said.
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