Moody’s Analytics sees below 5% GDP in Q4

Philippine economic growth likely slowed to below five percent in the final quarter of 2023 on the back of softer global economic growth, according to Moody’s Analytics.

In its latest weekly highlights and preview, the research arm of the Moody’s Group said the Philippines’ gross domestic product (GDP) growth likely decelerated to 4.9 percent in the fourth quarter of 2023 after quickening to 5.9 percent in the third quarter.

“In the Philippines, improving private consumption amid fading inflation, a tight labor market, and robust remittances should support economic growth of 4.9 percent year-over-year,” Moody’s Analytics said.

The economy should grow by at least 7.2 percent during the October to December period to deliver at least the lower end of the six to seven percent growth penned by economic managers.

“Higher spending by public agencies as the year closed will lend support, but a softening global economy will put a lid on private investment and trade,” Moody’s Analytics said.

Moody’s Analytics expects the economic expansion of the Philippines in the fourth quarter to be faster than Taiwan’s 3.9 percent, but slower than Hong Kong’s 5.3 percent.

This is in contrast to the belief of Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. that the economic growth picked up further in the fourth quarter of 2023 despite the aggressive rate hikes delivered by the central bank.

“I think it’s going to be better than third quarter because second quarter was an aberration in terms of growth,”

Remolona earlier said.

The BSP chief was referring to the slower GDP growth of 4.3 percent in the second quarter of last year compared to the previous quarter’s 6.4 percent.

With the robust growth, Remolona said there is still room for the BSP to raise interest rates further.

“If the growth is strong, that gives us a bit more room to hike,” Remolona told reporters.

The first rate-setting meeting of the seven-member Monetary Board is scheduled on Feb. 15.