The growth of the Philippine economy likely slowed in 2023 compared to the preceding year, although domestic demand remained robust and should help sustain expansion, according to Security Bank.
In a commentary, Security Bank chief economist Robert Dan Roces said gross domestic product (GDP) likely grew by 5.6 percent last year, with a projected 5.8-percent expansion in the fourth quarter alone.
The government would have released the official readout by Jan. 31. But if Security Bank’s prediction comes true, growth last year would be slower than the 7.6-percent expansion in 2022.
Also, the full-year print would fail to hit the government’s target range of 6-percent to 7-percent growth target for 2023.
“This forecast is underpinned by several key indicators—the continual expansion of the Purchasing Managers’ Index signifies robust manufacturing and service activities; a decrease in unemployment rates indicates a stronger job market, boosting consumer spending,” Roces said.
“And a surge in big-ticket consumption, especially in vehicle sales, reflects growing consumer confidence and disposable income,” he added.
In December 2023, the interagency Development Budget Coordination Committee (DBCC) tempered its GDP growth target for 2024 to 6.5 percent to 7.5 percent, from the previous goal of 6.5 percent to 8 percent.
The downscaling of the outlook for this year was expected. At present, the biggest worry for the government is the prolonged El Niño dry spell, which is predicted to last until the second quarter this year and affect 65 out of the 82 provinces in the country.
Another challenge for the economy is the high-interest rate environment that could hurt consumption and investments.
But the DBCC retained its 6-percent to 7-percent growth projection for 2023 as “momentum is expected to continue for the rest of the year and surpass that of our neighboring countries.” INQ