GDP growth likely slowed in Q4 —poll

THE PHILIPPINE ECONOMY may have slowed in the fourth quarter of 2023, which likely resulted in gross domestic product (GDP) growth falling below the government’s full-year target, according to analysts.

GDP likely expanded by 5.7% in the October-to-December period in 2023, based on a median forecast of 20 economists polled by BusinessWorld, slower than the 5.9% growth in the third quarter and the 7.1% expansion in the same period in 2022.

The poll also yielded a median estimate growth of 5.5% for the full year of 2023, missing the Development Budget Coordination Committee’s 6-7% GDP growth target.

If realized, the full-year growth estimate for 2023 would be slower than the 7.6% expansion in 2022 and the slowest since the 9.5% contraction in 2020.

The BusinessWorld poll’s 5.5% GDP median estimate for 2023 is lower than the World Bank’s estimate of 5.6% and the Asian Development Bank’s estimate of 5.7% but higher than the International Monetary Fund’s estimate of 5.3%.

The Philippine Statistics Authority (PSA) will release the fourth-quarter and full-year 2023 GDP data on Wednesday (Jan. 31).

Economists said that slower growth in the last three months of 2023 was primarily due to reduced domestic demand and consumer spending.

“The slowdown from the previous quarter was likely due to lower consumer spending and export growth,” Makoto Tsuchiya, economist at Oxford Economics said.

He noted the pent-up demand in certain service sectors is fading, while soft global growth and maturing recovery in the tourism sector led to an export slowdown.

For Zamros Bin Dzulkafli, economist at Maybank Investment Banking Group, the fourthquarter GDP growth was driven by domestic demand due to ongoing infrastructure projects, a pickup in government spending, and low unemployment rate.

HSBC ASEAN (Association of Southeast Asian Nations) economist Aris Dacanay said that the country is still exposed to a slump in global demand but is expected to be among the fastest-growing economies in the region even with risks tilted to the upside, thanks to the robust and resilient labor force.

In the third quarter of 2023, GDP expanded by 5.9%, due to the pickup in government spending which ended three straight quarters of slowing growth.

Meanwhile, merchandise exports dropped by 0.5% to $5.78 billion in December, slower than the 7.5% decline in December 2022. This resulted in exports contracting by 7.6% to $73.52 billion in 2023.

Similarly, imports fell by 5.1% to $9.79 billion in December, bringing the full-year import haul down by 8.2% to $125.95 billion.

This brought the full-year trade deficit to $52.42 billion from the $57.65-billion gap in 2022, narrowing by 9.1%.