Growth in the Philippines’ gross domestic product (GDP) may have accelerated to 6.1 percent in the first quarter of 2024 amid increased infrastructure spending that will likely continue for the rest of the year, according to analysts.

Based on the latest “Market Call” of Metrobank-affiliate First Metro Investment Corp. (FMIC) and its research partner the University of Asia and the Pacific (UA&P), economists forecast the GDP will accelerate at 6.1 percent in the first quarter. If it happens, the first quarter growth will be higher than the 5.6 percent recorded in the fourth quarter 2023 but lower compared to 6.4 percent in the first quarter last year.

“The economy looks set to accelerate in 2024 with Q1 GDP estimated at 6.1% as infrastructure spending goes into high gear with National Government (NG),” according to FMIC-UA&P analysts.

The NG spending will also be buoyed by official development assistance or ODA funding while public-private partnership or PPP projects “gain traction”.

“We expect NG to have a strong start in 2024 after the understandable tentativeness of the different departments at the start of 2023 when the then new administration had just been in an organizational mode. Infrastructure spending, both government funded [i.e., huge P1.0-T DPWH budget alone] and PPP projects, should accelerate in 2024 as NG bids out and awards large undertakings starting with the recent $3.0-B Ninoy Aquino International Airport (NAIA) expansion,” noted the economists.

The government forecasts the GDP will grow by 6.5 percent to 7.5 percent this year. Last year, the economy grew by 5.6 percent, down from 7.6 percent in 2022.

Meanwhile, FMIC-UA&P said as GDP sustains its growth momentum, inflation is expected to fall within the Bangko Sentral ng Pilipinas (BSP) target range of two percent to four percent this year. This is “as rice and crude oil prices ease, albeit without discounting occasional spikes.”

FMIC-UA&P said they expect inflation will settle at 3.7 percent in the first half of 2024.

“We may see year-on-year inflation reach 3.7% in H1, but it should return to under 3.5% by Q3,” it said.

“While seasonally adjusted January month-on-month inflation surged by 0.9% due largely to food (esp. rice) and fuel price increases, we do not expect similar movements in the coming months. Thai rice export prices appear to trend slightly downward in February, while crude oil prices have consistently failed to break through strong resistance levels,” said analysts.

As of the last Monetary Board policy meeting on Feb. 15, the BSP’s risk-adjusted inflation forecast for 2024 is 3.9 percent and 3.5 percent for 2025. The year-to-date inflation is at 3.1 percent after February’s consumer price index release. The next policy meeting is on April 8.

As for the peso, the analysts predict the exchange rate “will likely have a brief appreciation run until May but would resume to fall as economic growth takes a faster pace.”

“(The) USD-PHP rates will likely have a strengthening bias in H1 given the technical analysis and mild weakening of the US dollar,” it added. The peso is still ranging between P55 to P56 versus the greenback.