ECONOMISTS SEE

GDP growth came in at 5.6 percent last year, slowing from 2022’s 7.6 percent and missing the government’s 6.0- to 7.0-percent target.

“Increased investment and household spending fueled the growth … amid elevated interest rates and easing inflation,” the economists noted.

Record-high employment and inflation having returned to the central bank’s target should give consumers the confidence to increase spending in 2024, they added, particularly in the first quarter and potentially stimulating growth.

GDP growth could accelerate at least 6.0 percent this year, the FMIC and UA&P economists said, slower than the 6.57.5 percent targeted by the government and in line with other analysts’ expectations of below-target 2024 growth.

While inflation averaged higher than the 2.0- to 4.0-percent target last year at 6.0 percent, it has now stayed below 4.0 percent in the last two months. Despite continued upside risks, the Bangko Sentral ng Pilipinas last week said that it could settle at 3.9 percent this year.

One of the factors that could drive inflation higher this year is crude oil prices but the FMIC and UA&P economists pointed to forecasts of a decline.

Regarding rice prices, which surged by 22.6 percent last month, the economists said the threat could soon dissipate with an end to the El Niño weather phenomenon by May 2024 and with guaranteed imports from Vietnam in the first half.

The peso, meanwhile, is expected to face challenges in the first half as still high US interest rates attract foreign funds and as the Philippines continues to experience a significant trade deficit.