The Philippine economy must prepare for potential disruptions from political instability and intensifying natural hazards that could undermine growth amid persistent inflation and global uncertainty, a study by the Philippine Institute for Development Studies (PIDS) warned.
In its report titled ‘Macroeconomic Prospects of the Philippines in 2024-2025: Toward Upper Middle-Income Status,’ authors John Paolo Rivera, Mark Gerald Ruiz and Ramona Maria Miral said political uncertainties may result in policy shifts, delayed reforms and reduced investor confidence.
Due to this, the study called for comprehensive risk management strategies to guard against market shocks and noted that corruption, red tape and bureaucratic inefficiencies continue to discourage both local and foreign investments.
It also underscored that the Philippines’ exposure to natural hazards remains a major threat to economic stability.
As one of the most disaster-prone countries in the world, the nation faces mounting risks from typhoons, floods and earthquakes.
The report warned that rapid-onset climate change events could worsen these disasters, causing disruptions in agriculture, infrastructure damage and major economic losses.
Without strong climate resilience measures, it added, natural calamities could hamper food production, drive inflation and strain government recovery funds.
‘The Philippine economy continues to face multiple headwinds that could disrupt growth. These challenges could potentially hinder the country from exceeding its pre-pandemic growth trajectory and will require careful management by economic stakeholders,’ it noted.
PIDS also cited external risks such as rising oil prices, supply chain disruptions and volatile foreign exchange rates, which could weaken household purchasing power and increase business costs.
Weaker global demand from key trading partners may further slow exports and foreign direct investment.
To sustain growth, the study recommended proactive policies, sound governance and stronger resilience-building efforts.
It urged individuals, businesses and the government to adopt adaptive strategies to mitigate economic risks.
‘Each stakeholder group has a critical role in ensuring economic resilience in the face of challenges. Coordinated efforts from all sectors are essential to ensure that the Philippines can sustain growth amid global and domestic uncertainties toward achieving upper middle-income status,’ the report said.
The study also advised building emergency savings to cushion the impact of inflation, higher interest rates and potential job losses, while stressing the urgency of climate resilience in agriculture, infrastructure and urban planning.