Economist: Growth likely slowed in Q4

PHILIPPINE economic growth likely slowed but remained relatively strong in the last three months of 2023, a Security Bank Corp. economist said, resulting in a missed full-year target.

October-December growth could have hit 5.8 percent, Security Bank chief economist Robert Dan said, moderating from the 5.9 percent recorded three months earlier.

If realized, this would bring full-year gross domestic product growth (GDP) growth to 5.6 percent, below the government’s 6.0- to 7.0-percent goal.

It will also be a marked slowdown from 2022’s 7.6 percent, which was due to robust consumer spending despite higher inflation.

The Philippines started 2023 strong with 6.4-percent growth in the first quarter. The rate, however, markedly slowed to just 4.3 percent in April-June — attributed to a contraction in government spending — before it rebounded in the third quarter.

Base effects, still-high inflation and the impact of interest rate hikes have been cited as factors behind the slowdown.

Government officials have said that the lower end of the 2023 target — 6.0 percent — could still be achieved but this would need an October-December acceleration to 7.4 percent.

Whether this was achieved will be known next week when preliminary fourth quarter and fullyear GDP data will be released by the Philippine Statistics Authority.

Roces said fourth-quarter growth would have been supported by increased manufacturing output as indicated by Purchasing Managers’ Index data, lower unemployment, and continued consumer spending.

“While there are concerns such as a wide trade deficit and elevated policy rates, these are counterbalanced by the strong domestic economic activity, supporting the projection of sustained growth,” he added.

Roces’ growth estimate is in line with those from other analysts who expect Philippine growth to have slowed from 2022 but stayed relatively strong.

Last week, the Asean+3 Macroeconomic Research Office trimmed its 2023 estimate to 5.6 percent, down from 5.9 percent previously, but said the country would remain one of the fastestgrowing economies in the region.

The World Bank, meanwhile, kept its 2023 estimate of 5.6 percent in its latest Global Economic Outlook despite the likely impact of a slowdown in China.