The government will likely miss its 2023 growth target of 6 percent to 7 percent amid global headwinds, economists from First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) said in a joint report Wednesday.
The economists said in the September 2023 issue of Market Call that the gross domestic product in the third quarter might grow by 5 percent to 5.2 percent. They said while the third-quarter growth could be faster than 4.3 percent in the second quarter, this would not be enough to attain the lower end of the full-year target range.
“We still see sufficient strength in the economy to get a 5.0 to 5.2 percent year-on-year Q3 GDP growth,” they said, adding that the acceleration of industry and manufacturing sectors, together with consumer spending should bring back the fourth-quarter growth above 6 percent.
“Thus, we still see full year GDP growth at a respectable 5.5 percent despite the global slowdown,” they said.
Economists said the elevated government spending in the third quarter should provide the stimulus, and this would be accompanied by a strong rebound in employment and consumer spending starting September.
The industry sector’s expansion would be broad-based, although manufacturing would take the lead, the report said.
The economists said the services sector should see domestic and foreign tourism drive trade, transportation and storage and accommodations and food services starting September.
Data from the Philippine Statistics Authority showed that the second-quarter growth slowed to 4.3 percent from 7.5 percent in the same period last year, weighed down by global slowdown due to elevated inflation and higher interest rates.
This brought the average first-half expansion to 5.3 percent, lower than the target range of 6 percent to 7 percent.
Oxford Economics said earlier the economy felt the impact of monetary tightening done by the Bangko Sentral ng Pilipinas to rein in inflation.
It said the second-quarter data added weight to expectation that the Bangko Sentral ng Pilipinas was unlikely to hike the policy rate in its next meetings, and raise the risk the central bank might start cutting rates sooner than its first-quarter 2024 expectation.
National Economic and Development Authority Secretary Arsenio Balisacan said the government was sticking to the GDP growth target range for 2023 despite the sluggish growth in the second quarter, as improvements could be seen in the remaining months of the year.
The interagency Development Budget Coordinating Committee in June 2023 kept the target range for 2023 and its growth assumption of 6.5 percent to 8 percent for 2024 to 2028.
The economy grew by a 46-year high of 7.6 percent in 2022 on the reopening of the economy to greater normalcy.