NEDA upbeat on sustaining growth momentum
The National Economic and Development Authority (NEDA) is optimistic the country would sustain its economic growth momentum despite persisting challenges such as weak global economic growth and inflation.
While the government has set a higher economic growth goal for 2024 compared to the previous year, multilateral lenders and other observers expect growth this year to fall below target.
NEDA Secretary Arsenio Balisacan said the government is confident that the country will “continue the momentum in the economy with respect to growth, with respect to employment generation, [and] continued reduction of inflation.”
He said the government is aiming to achieve a full-year gross domestic product (GDP) growth of 6.5 to 7.5 percent for this year.
“This growth will be supported by low and manageable inflation, a labor force with access to more and better jobs, a stronger fiscal position in the form of a lower deficit and debt as a share of GDP, and an increasingly dynamic, innovative, and competitive economy,” he said.
The government’s 2024 growth target is higher than the six to seven percent growth goal set for last year.
Balisacan said meeting this year’s growth goal would help the country to generate economic and employment opportunities, raise per capita incomes, as well as achieve “upper-middle-income-country” status by 2025.
As the government is scheduled to release data on the country’s GDP growth in the fourth quarter today, Balisacan is confident the economy performed better compared to the previous quarter’s 5.9 percent, amid improvements in the labor market and decline in inflation.
The country’s jobless rate in November last year dropped to 3.6 percent, its lowest level since April 2005.
Inflation also eased to a 22-month low of 3.9 percent in December last year from November’s 4.1 percent as both utility and food costs registered lower growth.
With GDP growth in the first to third quarter at 5.5 percent, the economy should expand by 7.2 percent in the fourth quarter to hit the lowend of the six to seven percent growth goal for last year.
MULTILATERALS SEE FASTER GROWTH
Multilateral lenders World Bank and Asian Development Bank (ADB) expect the Philippine economy to grow at a faster pace this year than in 2023, but their growth forecasts are lower than the government’s growth goal.
The World Bank’s latest Global Economic Prospects report showed the multilateral lender expects the Philippines to grow 5.8 percent this year from its estimated 5.6 percent growth in 2023.
With a forecasted growth of 5.8 percent for this year, the World Bank expects the Philippines to be the fastest growing economy along with Cambodia in Southeast Asia, ahead of other countries like Vietnam (5.5 percent), Indonesia (4.9 percent), Malaysia (4.3 percent), Lao People’s Democratic Republic (4.1 percent), Thailand (3.2 percent) and Myanmar (two percent).
For ADB, its 2024 GDP forecast for the Philippines is at 6.2 percent, higher than the estimated 5.7 percent growth for last year.
ADB’s growth forecast for the Philippines for this year is also the highest in Southeast Asia, with other countries expected to post lower growth rates such as Vietnam (six percent), Indonesia (five percent), Malaysia (4.6 percent), Thailand (3.3 percent) and Singapore (2.5 percent).
The Association of Southeast Asian Nations Plus 3 Macroeconomic Research Office’s (AMRO) growth forecast for the Philippines for this year is at 6.3 percent, higher than the estimated growth of 5.6 percent for 2023.
AMRO expects the Pilippines to post the fastest growth in Southeast Asia this year, followed by Cambodia (6.2 percent), Vietnam (six percent), Indonesia (5.2 percent), Malaysia (five percent), Lao People’s Democratic Republic (4.7 percent), Thailand (3.3 percent), Myanmar (3.2 percent), Singapore (2.6 percent) and Brunei Darussalam (2.4 percent).
A study from state think tank Philippine Institute for Development Studies (PIDS) also showed the economy is expected to post faster growth of 5.5 to six percent this year from an expected 5.2 percent growth last year.
“Consumption may still support growth despite weak global economic prospects,” PIDS research fellow Margarita Debuque-Gonzales, and research analysts Mark Gerald Ruiz and Ramona Maria Miral who authored the study said.
The authors cited steady flow of remittances from abroad, higher wages, which may partially offset lost purchasing power and improvements in the labor market.
CHALLENGES REMAIN
Balisacan said the Philippine economy performed generally well last year, but challenges remain.
“While there has been some improvements lately, we know that many of the advanced countries are still struggling with recovery. Of course, the geopolitical tensions are still there. We hope that it will not spread to more areas,” he said.
He also said inflation is still a challenge to growth, even as it has decelerated.
With the El Niño this year, he said there is a need to work harder to manage food inflation.
“We know the challenges. The economy is still not as good as we want it. But we do think there are growth opportunities,” he said.
He said reforms enacted by the government including the amendments to the Public Service Act, which allow full foreign ownership in certain sectors, would open growth opportunities.
“That should spur investments in areas like tollways, airports even in digital, telecom services,” Balisacan said.
He also cited the Public Private Partnership (PPP) Code signed into law late last year, which aims to address challenges affecting the implementation of PPP projects.
The government is currently working on the implementing rules and regulations of the PPP Code, which it hopes to release by March this year.
In addition, the government is pushing for infrastructure development.
“We are expanding our investment there by ensuring that infrastructure development will get at least five to six percent of our GDP to sustain the momentum that we have already started,” Balisacan said.
“We are expanding our investment there by ensuring that infrastructure development will get at least five to six percent of our GDP to sustain the momentum that we have already started.”