Growth is expected to be driven by strong household consumption, sustained strength in the services sector, and improved trade stemming from a rebound in global demand for goods and the continued recovery of services, the World Bank's Philippines Economic Update said.
The government's commitment to bolstering public investment, with plans to invest an average of 5.7 percent of gross domestic product (GDP) from 2024 to 2026, including 124 new flagship infrastructure projects, is expected to boost growth.
However, the report said that higher-than-expected inflation, extreme weather and climate change, global geopolitical tensions, tighter-than-expected financial conditions pose risks to the growth outlook.
A prolonged El Nino pattern, and possibly a La Nina, could strain the domestic food supply and increase inflation.
"The current El Nino phenomenon exemplifies the severe disruptions that extreme weather events, intensified by climate change, can cause," said World Bank Country Director for Brunei, Malaysia, the Philippines, and Thailand Ndiame Diop.
"To manage inflation, the continued implementation of non-monetary strategies is essential, including efforts to optimize supply and demand management and to secure timely and adequate imports of staple food items," said World Bank Senior Economist Ralph Van Doorn.
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