The Philippine Statistics Authority (PSA) reported that the Philippine economy grew by 5.2% year-on-year (YoY) in the fourth quarter (4Q) of 2024, bringing full-year GDP growth to 5.6%. <\/p>\n\n\n\n
The 4Q 2024 figure was lower than the Philippine government’s 6% target and also lower than the 5.5% median estimate. The weakness mostly came from slower-than-expected household spending, which grew by 4.7% YoY. This is the slowest 4th quarter for consumer spending since 2009, excluding the 7.3% contraction in 2020 due to the global pandemic. <\/p>\n\n\n\n
On a per industry basis, both Agriculture and Mining took a hit from the series of typhoons that hit the country from late October to early November, leading to Agricultural output contracting by 1.8% YoY while Mining output dropped by 3.4%. Construction was also impacted by bad weather, with growth slowing to +7.8% YoY from +9.0% the previous quarter.<\/p>\n\n\n\n
The 4th quarter consumer spending numbers came in much weaker than what we expected, and this is despite moderate average inflation of 2.6% during the quarter. We think this is likely due to consumer confidence, as measured by the BSP\u2019s Consumer Expectations Survey (CES), remaining negative during the quarter at -11.1.<\/p>\n\n\n\n
However, we remain optimistic on the consumer sector in the following quarters and this is also backed by the CES which pegs consumer confidence for this quarter at +4.2 and for the coming year at +12.4. We anticipate that a more prolonged period of benign inflation should allow consumers to rebuild their savings and later loan repricing would free up more disposable income for consumers with outstanding mortgages. <\/p>\n\n\n\n
As such, we maintain our 2025 GDP forecast at 6.0-6.2% as consumer spending starts to recover, alongside a pick-up in government spending and capital formation as the BSP eases rates further.<\/p>\n\n\n\n