Below target growth for 2023 – think tank

MANILA, Philippines — The Philippine economy is expected to grow by 5.5 percent for this year, below the government’s target, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research.

“With few surprises from economic data releases for the rest of December, we confirm our 5.5 percent gross domestic product growth outlook for 2023,” FMIC and UA&P said in the Market Call report for December.

The growth forecast is below the six to seven percent growth goal set by the government for this year.

For the fourth quarter, FMIC and UA&P said they expect the economy to grow by 5.6 percent.

The two institutions said 2023 “should end with a fourth quarter gross domestic product growth of 5.6 percent (with an upside bias), on account of robust national government infrastructure spending, elevated employment levels and slower second half inflation.”

They said full-year inflation is projected to reach six percent.

Inflation eased to its lowest level in 20 months to 4.1 percent in November from 4.9 percent in the previous month as food prices posted slower increases.

This brought average inflation in the January to November period to 6.2 percent, still higher than the Bangko Sentral ng Pilipinas’ two to four percent target.

In addition to government spending and increase in employment, FMIC and UA&P said growth in the fourth quarter would also be supported by consumption.

“We also see improved consumer expenditures, amid more brisk revenge spending especially in the transport and storage, and accommodation and food services sectors driven by domestic and foreign tourism,” the two institutions said.

The economy posted a 5.9-percent growth in the third quarter, faster than the 4.3 percent in the second quarter.

From January to September, average growth was at 5.5 percent.

In order to reach the lower end of the six to seven percent growth target for the year, National Economic and Development Authority Secretary Arsenio Balisacan said the economy will need to expand by 7.2 percent in the current quarter.

He said the government is optimistic that the lower end of the target could be reached, or growth would be near the lower end of the range, with fourth quarter growth likely to be supported by lower inflation as well as favorable labor market and manufacturing conditions.