DOF expects at least 7% growth in Q1

The Philippine economy likely grew by at least seven percent in the first three months of the year amid extended revenge spending, the Department of Finance (DOF) said. Finance Secretary Benjamin E. Diokno said pent-up demand from the prolonged pandemic has yet to fade-down, citing that consumers continued to flock back to shops and restaurants even with high inflation. “Pent-up demand is still there. If you will notice restaurants are packed and it’s difficulty to make reservations, so my guess is at least seven percent for the first-quarter,” Diokno told reporters. Diokno’s outlook runs counter to some economists’ prediction that growth likely slowed sharply from January to March owing to elevated inflation and rising interest rates. Diokno’s first-quarter economic growth forecast, however, is still much slower than the 8.2 percent a year earlier and 7.1 percent in the fourth quarter last year. National Economic and Development Authority Arsenio M. Balisacan earlier said the aggressive monetary policy tightening to lower inflation would drag down growth in 2023. But despite the slowdown, the government’s economic managers remained confident that the country is still on track to meet this year’s growth target. Last April 24, the inter-agency Development Budget Coordination Committee (DBCC) kept its gross domestic product (GDP) target of 6.0 percent to 7.0 percent for this year and 6.5 percent to 8.0 percent for 2024 to 2028. Budget Secretary Amenah F. Pangandaman said the GDP forecast already factored in risks posed by geopolitical and trade tensions, possible global economic slowdown, as well as weather disturbances in the country. The DBCC, however, adjusted upwards its inflation outlook for 2023 on the back of “persisting high prices of food, energy, and transport costs.” According to the inter-agency body tasked to set the government’s macroeconomic assumptions, inflation may average around 5.0 percent to 7.0 percent, higher than the previous assumption of 2.5 percent to 4.5 percent. But the DBCC expects inflation to return to the target range of 2.0 percent to 4.0 percent between 2024 and 2028. The Philippine Statistics Authority is scheduled to release the first-quarter economic performance on May 11.