Security Bank sees 5.8% economic growth in Q4

Security Bank Corp. believes the Philippine economy grew by 5.8 percent in the fourth quarter last year, bringing the full-year gross domestic product (GDP) growth to 5.6 percent in 2023.

This, however, is slower than the 5.9 percent expansion recorded in the third quarter of last year and the 2022 GDP growth of 7.6 percent.

The growth is also slower than the six to seven percent GDP growth target penned by economic managers via the Development Budget Coordination Committee (DBCC).

“The economic outlook for 4Q23 and the full year of 2023 is optimistic, with a projected growth of 5.8 percent and 5.6 percent, respectively,” Security Bank chief economist Robert Dan Roces said.

He explained that several key indicators, such as the continuous expansion of the purchasing managers’ index (PMI), which signifies robust manufacturing and service activities, underpin the forecast.

Roces also pointed out that the decrease in unemployment rates indicates a stronger job market, which boosts consumer spending. Additionally, there has been a surge in big-ticket consumption, particularly in vehicle sales, reflecting growing consumer confidence and disposable income.

“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 said.

For 2024, Security Bank president and CEO Sanjiv Vohra said GDP growth is expected to bounce back to the six percent handle.

“For our forward view on 2024, our baseline outlook is for Philippine GDP growth to continue at around the six percent area, and for interest rates to be high-for-longer,” Vohra told The STAR.