The local economy may have grown by 5.8 percent in the fourth quarter 2023, slightly lower than 5.9 percent in the third quarter, according to Security Bank Corp. (SBC) senior economist Robert Dan Roces.
In a commentary, Roces said this will bring its full-year gross domestic product (GDP) forecast to 5.6 percent for 2023, which will be below the government’s six percent to seven percent GDP target. For the first three quarters of 2023, GDP expanded by 5.5 percent.
“The economic outlook for 4Q23 and the full year of 2023 is optimistic, with a projected growth of 5.8% and 5.6%, respectively. This forecast is underpinned by several key indicators: the continual expansion of the Purchasing Managers' Index (PMI) signifies robust manufacturing and service activities; a decrease in unemployment rates indicates a stronger job market, boosting consumer spending; and a surge in big-ticket consumption, especially in vehicle sales, reflects growing consumer confidence and disposable income,” noted Roces.
He added that “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.”
The government will release the fourth quarter and 2023 GDP numbers on Jan. 31.
Based on the Dec. 14, 2023 minutes of the central bank’s Monetary Board policy meeting, it noted that there were recent indicators that affirm their view of a stronger recovery in the near term, such as labor market conditions with the “higher share of wage and salaried workers and the decline in underemployment signaling an improvement in employment quality.”
In addition, the Bangko Sentral ng Pilipinas (BSP) said that the sustained growth in vehicle sales also suggested that private consumption “remained relatively firm despite tighter financial conditions.”
Generally, the BSP said the country’s growth prospects remain intact for 2023 to 2025 despite global headwinds and tighter financial conditions.
It said that the full-year growth estimates for 2023 to 2025 have improved, reflecting the faster-than-expected growth outturn in the third quarter 2023 of 5.9 percent from 4.3 percent in the second quarter. The positive sentiment was supported by strong private and public spending, improved labor conditions, and sustained remittances from overseas Filipinos, said the BSP.
“However, GDP growth could settle below the Development Budget Coordination Committee’s (DBCC) target from 2023 to 2025 as subdued global economic conditions and the lagged impact of the policy rate adjustments weigh on economic activity,” it also noted.
The DBCC forecasts the economy to grow by six percent to seven percent in 2023 and by 6.5 percent to eight percent in 2024 and in 2025.