DOF: 6-7% GDP growth target for ʼ24 can still be achieved

Department of Finance

The Department of Finance (DOF) said the government’s 6 to 7 percent growth target for this year can still be achieved on expectations of an increase in both consumer and government spending in the next quarters.

At a business journalism seminar hosted by the Economic Journalists Association of the Philippines (Ejap) and San Miguel Corp. on Saturday, Finance Undersecretary Domini Velasquez said gross domestic product (GDP) would have to grow by 6.1 percent for the rest of the year to hit at least the low-end of the Marcos administration’s target for 2024.

This, after the economy grew 5.7 percent in the first quarter, falling below market consensus estimate of 5.9-percent growth for the period.

“I think for the government our target is 6-7 percent. It looks still very achievable. So likely you grow a little bit faster in the second quarter this year,” Velasquez, chief economist at DOF, said.

“In terms of Asean, the Philippines will be growing maybe at par with Vietnam so that’s very good for us also,” she added.

Secretary Arsenio Balisacan of the National Economic and Development Authority (Neda) had attributed the slower-than-expected growth in the first quarter to persistently high prices and the anti-inflation interest rate hikes that crimped household and state spending.

Household spending

Data showed household spending growth had eased to 4.6 percent in the first quarter, from 5.3 percent in the final three months of 2023. This was the weakest reading since a 4.8-percent contraction at the height of COVID-19 pandemic in the first quarter of 2021.

Meanwhile, government spending grew 1.7 percent in the January to March period, reversing the 1-percent decline in the preceding three months but still lower than the 6.2 percent uptick in the first quarter of 2023. Balisacan said the extremely hot weather had disrupted construction activities, likely slowing down government expenditures on infrastructure as a result.

Moving forward, Velasquez said consumer spending and government expenditures would likely pick up for the rest of the year.

“We expect that consumption will increase as long as inflation will slow,” she said.

“In terms of government consumption, we expect it to increase in the coming months. The good thing about government spending is that public construction is up,” she added.