Philippines overtakes Malaysia, Vietnam to become Southeast Asia’s fastest growing economy

While the annual pace of expansion is slower than the Philippine government’s 6 to 7 per cent target, it is the fastest pace in the region so far

Malaysia’s economy, which posted Southeast Asia’s quickest growth in 2022 at 8.7 per cent, likely slowed to 3.8 per cent last year, economists say

2-MIN READ2-MIN

Vehicles travel along a road in Manila earlier this month. Gross domestic product expanded 5.6 per cent in the Philippines last year. Photo: Bloomberg

Published: 3:03pm, 31 Jan 2024Updated: 10:22pm, 31 Jan 2024

The Philippines overtook Vietnam and Malaysia to become Southeast Asia’s fastest-growing economy last year, with expansion driven by consumption, services and investment.

Gross domestic product expanded 5.6 per cent, surpassing the median 5.5 per cent growth seen in a survey of economists. The economy grew at a similar pace from a year ago in the final quarter of the year, while on a quarter-on-quarter basis, it clocked 2.1 per cent.

Stocks extended their gains to more than 1 per cent after the data. The peso held its loss, with the currency slipping 0.1 per cent against the US dollar.

A conductor handles peso bills and coins in Caloocan City, the Philippines. Photo: Bloomberg

While the annual pace of expansion is slower than the government’s 6 to 7 per cent target, it is the fastest pace in the region so far – overtaking Vietnam’s 5.05 per cent performance. Malaysia’s economy, which posted Southeast Asia’s quickest growth in 2022 at 8.7 per cent, likely slowed to 3.8 per cent in 2023. Indonesia and Thailand are set to report economic data next month.

National Economic and Development Authority Secretary Arsenio Balisacan told reporters on Wednesday the government was confident that the economy would expand at a pace of 6.5 to 7.5 per cent in 2024 – which will help the Philippines retain the region’s top growth tag.

That echoes the optimism of President Ferdinand Marcos Jnr about the consumption-driven economy’s prospects, as inflation cools and the central bank halts one of the region’s most aggressive interest-rate tightening campaigns.

Still, sustaining the stellar performance requires heavy lifting by the government, given monetary policymakers are unlikely to pivot to easing any time soon amid lingering price risks.