New Year Outlook

The Philippines’ economic performance in 2023 was decent, says award winning Philippine National Bank economist Alvin Arogo, considering waning revenge spending, persistently high inflation, and the negative impact of elevated interest rates. The country’s gross domestic product (GDP) growth likely eased to 5.4% in 2023 from 7.6% in 2022, primarily driven by the rise in consumer prices and sharp increase in interest rates over the past two years.

Alvin forecasts that economic conditions will be slightly better in 2024, with GDP growth at 5.7%. Inflation is expected to be under control at 4.5% amid favorable initiatives from the government, such as ensuring adequate agricultural buffer stocks and the extension of the reduced tariff rates on key commodities. Consumer spending will be more robust and contribute further to the economy. The Bangko Sentral ng Pilipinas will likely cut interest rates, making it less expensive for companies to finance their capital expenditures. Consequently, capital formation will likely expand at a better rate in 2024. With the likely end of the rate hike cycle, expect the peso to remain relatively manageable and trade at a range of P54.50-57.50. Key risks, says Alvin, are the emergence of new supply shocks, the possibility of a harsher El Niño, and the escalation of tensions between the Philippines and China may dampen business and consumer confidence.

At our Christmas family reunion, IT and Business Process Association of the Philippines President Jack Madrid (married to my niece Belinda Gozon) talked passionately about the ITBPM sector as a bright spot.

FLOR G. TARRIELA was former PNB chairman and now serves as board adviser. A former undersecretary of Finance, she is lead independent director of Nickel Asia Corp., director of LTG, Inc. and

FINEX. A gardener and an environmentalist she founded Flor’s Garden in Antipolo, now an events destination.