Philippines Expected to Lead ASEAN as Fastest-Growing Economy, Despite Anticipated Slowdown


According to a report from Malaysian banking giant Maybank, the Philippines is poised to become the fastest-growing economy in the Association of Southeast Asian Nations (ASEAN), despite an anticipated slowdown in the coming two years.

Maybank projects that the Philippines’ gross domestic product (GDP) growth may dip to 5.2 percent this year before rebounding to 6.5 percent next year. This follows a notable economic acceleration to 7.6 percent in 2022, marking a recovery from the pandemic-induced recession that saw a 5.7-percent expansion in 2021. In contrast, 2020 saw a significant 9.5-percent contraction in the Philippine economy due to strict COVID quarantine and lockdown measures.

Despite the expected deceleration, Maybank highlights the Philippines as the standout performer in the region, with an average economic growth projection of four percent for this year and 4.7 percent in 2024. In comparison, the Philippines’ growth surpasses that of Indonesia (five percent), Vietnam (4.8 percent), Malaysia (four percent), Thailand (2.9 percent), and Singapore (0.8 percent) for this year. Looking ahead to 2024, the Philippines’ GDP expansion is expected to outpace Vietnam (six percent), Indonesia (5.2 percent), Malaysia (4.4 percent), Thailand (3.6 percent), and Singapore (2.2 percent).

Economic managers within the Development Budget Coordination Committee (DBCC) have set a GDP growth target of 6.5 to eight percent for 2024.

Maybank attributes the brighter outlook for ASEAN in 2024 to several factors, including robust GDP growth in the United States driven by deficit spending and subsidies for semiconductor and electric vehicle manufacturers. Additionally, the normalization of global consumer spending toward goods, as well as the shift away from domestic services, is expected to contribute positively. The bank also cites the replacement tech cycle, declining US inventories, and stabilizing commodity and chip prices as factors bolstering ASEAN export growth in 2024.

Maybank notes nascent signs of recovery in trade and manufacturing data across the ASEAN-6 countries. Furthermore, the region may benefit from increased foreign direct investments resulting from shifts in manufacturing supply chains.

However, Maybank cautions that risks persist, as global economic growth remains uneven, with strong momentum in the US, weak activity in the European Union, and subdued demand in China. Nevertheless, ASEAN economies are seen as well-positioned to withstand such disruptions due to reduced external debt levels and resilient labor markets.

Maybank also points out that inflation has eased to more comfortable levels across ASEAN nations, with the exception of the Philippines.