The government may adjust the high end of the growth target range of 6.5 percent to 8 percent in the next two years amid the domestic and global uncertainties, National Economic and Development Authority Secretary Arsenio Balisacan said Wednesday.
Balisacan said in a yearend briefing, however, that NEDA would keep the minimum growth target of 6.5 percent for 2024 and 2025, with the sustained recovery of different sectors.
The interagency Development Budget Coordinating Committee (DBCC) earlier said the gross domestic product growth could range from 6 percent to 7 percent in 2023 and 6.5 percent to 8 percent in 2024 and 2025.
“There is no harm in reducing the 8 percent to something lower… but [we are] not lowering the 6.5 percent…[or] we are surrendering too early,” Balisacan said.
“We need to continue with the 6.5 percent to 8 percent to achieve the visions of the Ambisyon Natin 2040,” he said.
Balisacan said the services sector would continue to drive economic growth, especially with the opening of the economy. Other sectors that will contribute to further economic expansion are tourism, the business process outsourcing industry and construction, which would offset the expected impact of the El Niño dry spell on the agriculture sector, he said.
“The agriculture sector will be challenged due to El Niño, but we hope it will recover in the second half next year,” he said.
Meanwhile, the Asian Development Bank (ADB) maintained its 2023 growth forecast for the Philippines at 5.7 percent, citing continued support from domestic demand.
The ADB, in its December 2023 Asian Development Outlook (ADO) report, noted that the country’s gross domestic product (GDP) grew 5.9 percent in the third quarter and averaged 5.5 percent in the first nine months of the year.
“Household consumption eased in Q3 due in part to rising inflation, but overall it remained robust amid low unemployment and steady remittances from overseas workers,” the report said, adding that “full-time employment in September increased by 1.6 million from the same month the previous year.”
The ADB also noted that government spending rebounded in the third quarter, fueled by measures implemented to accelerate spending and address procurement delays. Public infrastructure spending accounted for 5.9 percent of GDP in the first three quarters, up from 5.8 percent in the whole of 2022.
The report further highlighted that several infrastructure projects are underway and that the business outlook remains optimistic for 2024, based on the central bank’s third-quarter survey. This optimism stems from anticipated strong domestic demand.
It maintained its growth forecast for 2024 at 6.2 percent. This makes the Philippine growth projections the fastest in Southeast Asia for both this year and next.
The ADB retained its inflation forecast for the Philippines at 6.2 percent for 2023 and 4.0 percent for 2024. The country has the highest inflation rate in Southeast Asia.
“Inflation in the Philippines moderated to 4.1 percent year-on-year in November from 4.9 percentin October, and averaged 6.2 percent from January to November,” the ADB report said, explaining that “improved domestic food supply slowed food inflation to 5.8 percent in November.”
The ADB noted that core inflation has steadily declined since April 2023, reaching 4.7 percent in November. To help contain inflation, the Bangko Sentral ng Pilipinas raised the policy rate by another 25 basis points in October.
Meanwhile, the ADB revised its economic forecast for developing economies in Asia and the Pacific upward, following higher-than-expected growth in China and India, driven by robust domestic demand.
The regional economy is now projected to grow 4.9 percent this year, compared to the previous forecast of 4.7 percent in September. The outlook for next year remains unchanged at 4.8 percent.
China’s economy is now projected to expand by 5.2 percent this year, compared to the previous forecast of 4.9 percent, after household consumption and public investment boosted growth in the third quarter. The growth outlook for India was raised to 6.7 percent from 6.3 percent following faster-than-expected expansion in July-September, driven by double-digit growth in industry.
These upgrades for China and India offset the lowering of the forecast for Southeast Asia, caused by lackluster performance in the manufacturing sector.
“Developing Asia continues to grow at a robust pace, despite a challenging global environment,” said ADB chief economist Albert Park.
“Inflation in the region is also gradually coming under control. Still, risks remain, from elevated global interest rates to climate events such as El Niño,” Park said. “Governments in Asia and the Pacific need to remain vigilant to ensure that their economies are resilient, and that growth is sustainable.”
The ADB lowered the region’s inflation outlook for 2023 to 3.5 percent from an earlier projection of 3.6 percent. For 2024, inflation is expected to edge up to 3.6 percent from a previous forecast of 3.5 percent.