PH GDP growth projection for ʼ23 cut on global woes

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MANILA  -Persistently weak global economic prospects and high prices of goods and services as well as ebbing consumer spending are expected to continue to weigh down Philippine output, such that it will grow much lower than previously forecast, according to GlobalSource Partners.

In a quarterly report penned by Romeo Bernardo and Marie Christine Tang, the New York City-based think tank said they scaled down their forecast for growth of Philippine gross domestic product (GDP) for this year to 5.2 percent from 5.5 percent.

For 2024, their forecast was slashed significantly to 5 percent from 5.8 percent, mainly due to a lack of productive factors—other than inbound remittances and export receipts from services like business process outsourcing—that could drive output expansion.

READ: Economists cut targets after slower Q2 growth

The Marcos administration’s economic team, however, insisted that their goal of 6 percent to 7 percent GDP growth for 2023 was “still achievable.” For this to happen, GDP must grow by 6.6 percent in the second semester.

READ: Philippines may still grow by 6% this year, says Remolona

GlobalSources’ downward revisions come after the widely proclaimed “disappointing” second-quarter results, which showed output growth of only 4.3 percent against the common forecast of 6 percent. Easing demand

GlobalSource said that while the slowdown in consumption was expected considering that postpandemic pent-up demand eased and high inflation erodes purchasing power, the 7-percent contraction in government spending was a surprise.

In addition, the benefit of an expected recovery in Chinese tourism is not being felt and might not be seen going forward. In the case of the Philippines, the group attributed this to Malacañang’s foreign policy pivot to the United States and to stricter regulation of online gaming.

READ: PH welcomes Chinese tourists; sees faster tourism recovery

Challenging goal

“[The] government’s challenging goal of keeping the economy on the fast lane, targeting 6.5 percent to 8 percent annual GDP growth, has been spoiled by the usual bane of new administrations, [which is] poor project execution that exacerbated the growth slowdown,” GlobalSource said.

“Going forward, the economy will continue to face the same headwinds and dissipating tailwinds,” they added. “Externally, weaker global growth is projected through 2024 for the Philippine’s major trading partners.”

For one, there are the persistent concerns about an economic recession in the United States, where interest rates are being kept high for much longer.

Also, commodity prices remain high especially for crude oil while food prices are also on the uptrend, particularly rice.

Notices of local oil companies show that, since the end of the second quarter, pump prices of diesel have seen a net increase of P12.50 per liter. The net increase is P8.25 per liter for gasoline and P11.80 for kerosene.

But it may be worse, as GlobalSource noted factors that may push down actual GDP growth readouts lower than their latest forecast.

“A recession in the United States and financial market turbulence due to higher long-term yields as well as another spike in inflation due to a host of food supply problems, including rice producers’ export bans and a more severe El Niño drought, are the main downsides to our forecast,” the think tank said. INQ