World Bank downgrades Philippine GDP projections for 2024 and 2025

The World Bank [link] downgraded its GDP projections for the Philippines in 2024 and 2025 due to “various headwinds facing private investment”, like the effects of higher interest rates and “rising indebtedness.” The World Bank had projected that the Philippine economy would grow by 5.8% in each of 2024 and 2025 but now believes that number to be 5.7% for both years. The World Bank noted that the downgrades were largely part of a region-wide trend.

MB BOTTOM-LINE: The silver lining is that 2024’s growth will still be faster than the 5.6% growth we experienced through 2023. Anecdotally, people around me are struggling to keep up. Lots of new middle-class people are under pressure to pay higher interest rates for cars and homes. Lots of stories of helpers, drivers, and rank-and-file workers applying for bale to buy food and pay basic bills. Not the traditional bale stuff like tuition, medical expenses, or a new roof after a storm, but just things like food and refinancing high-interest debt. Some economists are expecting the “labor boom” to support the economy through consumption, like Aris Decanay of HSBC, and while I don’t doubt their work, I do have a hard time reconciling the projections with the stories that I see and hear around me all the time. Banks and corporations in the financial services layer will likely profit substantially from all this new consumer debt, but how sustainable is this status quo? Maybe there’s a silent majority that I don’t see of people who are doing alright and engaging sustainably with consumer debt to finance new long-term consumption patterns. But as readers will know, this vocal cohort of people struggling to make ends meet has been the big red flag that prevents me from considering the pandemic/inflation shock “behind us”.  

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