Marcos admin seen missing 2023 GDP growth target

MANILA  -The Marcos administration would likely miss its economic growth target for 2023 despite the faster-than-expected performance in the third quarter, as inflation remains a persistent concern, analysts said.

In a commentary, BMI, a unit of the Fitch Group, said growth in 2023 would likely settle at 5.7 percent, up from its previous projection of 5.3 percent.

The upward revision was triggered by the release of new data showing the Philippine economy expanded 5.9 percent year-on-year in the third quarter, stronger than the 4.3 percent in the April-June period and snapping three consecutive quarters of slow growth.

If BMI’s prediction comes true, growth would settle below the government’s 6 to 7 percent target for this year.

Similarly, Goldman Sachs said that based on the third-quarter growth readout alone “would mechanically push our 2023 annual gross domestic product (GDP) growth forecast higher to 5.7 percent in 2023.”

However, the American group noted that government spending was mostly front-loaded to the third quarter, suggesting there would be less in the fourth quarter.

“Overall, we now expect real GDP to grow 5.5 percent in 2023, up from 5.2 percent previously,” Goldman Sachs said.

Slowdown

Citigroup also raised its estimate to 5.5 percent from 5.2 percent and similarly expects fourth-quarter output to grow slower to 5.2 percent.

“Meanwhile, we raise the GDP growth forecast to 2024 slightly to 6 percent from 5.9 percent earlier, noting the higher base and recovery in net exports, but also tighter monetary policy in [the first half of next year], which likely cap domestic demand’s acceleration,” Citi said.

On the other hand, despite the third-quarter surprise, Bank of the Philippine Islands maintained its 2023 forecast at 5.8 percent and Nomura group at 5.2 percent.

READ:  PH economy grew by 5.9% in Q3

The Philippine Statistics Authority reported on Thursday that GDP growth averaged 5.5 percent in the first three quarters of 2023.

Big problem

Socioeconomic Planning Secretary Arsenio Balisacan of the National Economic and Development Authority said the Marcos administration’s growth ambitions remained “doable” despite inflation still being the biggest problem for policymakers.

READ: Marcos admin vows to ensure sustained economic growth

The economy would have to expand by 7.2 percent in the fourth quarter to attain at least the low-end of the government’s target, Balisacan added.

For his part, Finance Secretary Benjamin Diokno expects full-year growth to settle “close to the low-end” of the state’s target for 2023 on expectations of “easing inflation” and high demand during the holiday season.

But BMI was not as optimistic as Balisacan and Diokno, adding that even the government’s projections of 6.5 percent to 8 percent in 2024 “might prove a little too optimistic due to several headwinds.”