First Metro Investment Corp. and University of Asia and the Pacific expect Philippine economy will grow by 6% this year

Recently, First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) expressed expectation that the economy of the Philippines will achieve 6% growth for the year 2024, according to a BusinessWorld news article.

To put things in perspective, posted below is an excerpt from the BusinessWorld news article. Some parts in boldface…

THE PHILIPPINES’ gross domestic product (GDP) is projected to grow faster this year as easing inflation will help boost “revenge spending,” analysts said.

First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said they expect GDP growth at 6% this year, still below the government’s 6.5-7.6% target.

“I think they will not be able to make the 6.5% unless foreign investments come in. And so far, if we look at 2023, foreign investments were actually down significantly… but we have to see how things pan out in the coming months,” Victor A. Abola, an economist at UA&P, said at a briefing in Makati City on Thursday.

FMIC and UA&P projected full-year GDP to average 5.5% in 2023, still below the government’s 6-7%. The economy grew by 5.5% in the nine-month period.

The Philippine Statistics Authority (PSA) is set to release full-year 2023 GDP data on Jan. 31.

“Growth will accelerate from 5.5% (in 2023) to 6% (in 2024), driven by the services sector, particularly, transport, accommodations, and food services, which are experiencing revenge spending,” Mr. Abola said.

Filipino consumers are expected to continue to splurge this year, which will help drive growth.

“We’re just seeing the beginning of (revenge spending) because high inflation has sort of toned down that expansion. So, I think that we’ll see faster GDP growth in 2024,” Mr. Abola said.

Improved employment will also boost the economy this year, Mr. Abola said, citing the record low jobless rate seen in November.

The country’s unemployment rate fell to 3.6% in November from 4.2% in the previous month and a year ago, marking an 18-year low. In November, the number of employed people also rose to 49.64 million from 47.8 million in October and 49.7 million in November 2022.

FMIC Executive Vice-President Daniel D. Camacho said the BSP will likely keep rates steady for the first half.

Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think internal and external economic factors will somehow become favorable for the Philippines and allow better economic growth along the way? Do you think there is too much attention paid on so-called revenge spending?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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