A research firm recently raised its forecast of the Philippine economy for 2024 predicting a gross domestic product (GDP) growth rate of 5.7% this year, according to a news report by BusinessWorld.
To put things in perspective, posted below is an excerpt from the BusinessWorld report. Some parts in boldface…
PHILIPPINE gross domestic product (GDP) may grow by 5.7% this year following the economy’s faster-than-expected expansion in the fourth quarter of 2023, UBS Global Research and Evidence Lab said.
The research firm raised its 2024 Philippine GDP growth forecast from 5.3% previously, Grace Lim, an economist from UBS, said in a note. It also hiked its 2025 projection to 6% from 5.8%.
“This largely reflects carryover effects from the fourth quarter of 2023, rather than a strong bounce in sequential growth momentum through 2024,” Ms. Lim said.
Both forecasts are below the government’s growth targets of 6.5-7.5% for this year and 6.5-8% for 2025.
The Philippine economy grew by 5.6% in the fourth quarter, bringing full-year growth to 5.6% in 2023. This was slower than the 7.6% expansion in 2022 and below the government’s 6-7% goal.
At 5.7%, economic growth this year would be faster than the 2023 pace but is still slower than the pre-pandemic average of 6.6%, Ms. Lim noted.
“On the bright side, we highlight that inflation has been trending down nicely, surprising consensus on the downside for three months in a row,” she said. “Should downside risks to inflation materialize, consumption could surprise on the upside.”
Inflation eased to 2.8% in January from 3.9% in December and 8.7% in the same month a year ago. This was the slowest print since October 2020 and marked the second straight month that inflation settled within the 2-4% target band.
Ms. Lim noted that consumer spending remained robust last year despite inflationary pressures and amid resilient labor market conditions.
In 2023, household spending grew by 5.6%, slower than 8.3% in 2022. Household consumption typically accounts for three-fourths of GDP.
Meanwhile, the unemployment rate dropped to a record low of 4.3% from the 5.4% recorded in 2022.
Let me end this piece by asking you readers: What is your reaction to this recent report? Do you think the Philippine economy will grow below the national government’s targets for 2024? Do you think UBS’ forecast of 5.7% growth will turn out correct by the end of this year?
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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