THE Philippine economy closed 2023 with a growth of 5.6 percent, falling short of the government’s target range of six to seven percent growth, the Philippine Statistics Authority (PSA) reported on Wednesday, Jan. 31, 2024.
Last year’s growth was also lower than the 7.6 percent growth recorded in 2022.
But the Department of Finance (DOF) said the country’s full-year gross domestic product (GDP) growth rate still outpaced the growth of major economies in Asia such as China (5.2 percent), Vietnam (five percent) and Malaysia (3.8 percent) based on the latest available data.
It also exceeded or matched the forecasts of multilateral organizations and private analysts, such as the International Monetary Fund, the Asean+3 Macroeconomic Research Office and the World Bank.
“The strong economic performance in 2023 is a clear testament to the government’s efforts in creating an environment conducive to enhancing the purchasing power of Filipinos,” said Finance Secretary Ralph Recto.
GDP refers to the total value of all goods and services produced within a country over a given period. It is a key indicator used by economists and policymakers to assess the size and health of a country’s economy and compare the economic performance of different countries.
Sought for comments, Marc Anthony Ynoc, incoming president of the Mandaue Chamber of Commerce and Industry (MCCI), said there has been a lot of disruptions that affected the Philippines’ current GDP from the high inflation rate, to high-interest rates, supply chain bottlenecks, elevated global commodity prices and other geopolitical factors.
Steven Yu, former president of MCCI said, the growth is still a “decent number” and at 5.6 percent, the country is still among the highest performers in Southeast Asia.
“We hope that we will have better growth numbers this 2024 with the expected increase in infrastructure spending and the lowering of interest rates before the year-end,” Yu said. “Albeit the slow start of the year 2024 this January, we remain optimistic that things will improve in the second half because of favorable Fed moves and better economy in China.”
In the fourth quarter of 2023, the country grew 5.6 percent due to stronger domestic demand despite an elevated inflation rate and external challenges.
The PSA said the main contributors to the fourth quarter growth were financial and insurance activities, 11.8 percent; wholesale and retail trade; repair of motor vehicles and motorcycles, 5.2 percent; and construction, 8.5 percent.
Agriculture, forestry and fishing grew 1.4 percent, while the Industry grew 3.2 percent and Services posted 7.4 percent in the fourth quarter of 2023.
On the demand side, household spending grew year-on-year by 5.3 percent in the fourth quarter of 2023. Recto said faster private consumption in the fourth quarter was driven by restaurants and hotels at 16.2 percent and transport at 12.2 percent, indicating that people are going out more and have more money to enjoy non-essential activities.
On the other hand, government spending contracted by 1.8 percent in the fourth quarter of 2023 from 6.7 percent growth in the third quarter. This brings the full-year growth in government spending to 0.4 percent, mainly due to the fiscal consolidation program.
The government projects faster GDP growth of 6.5 to 7.5 percent in 2024 despite domestic and external headwinds.
“To achieve 6.5 to 7.5 percent growth in 2024 and make growth inclusive, we need to continue addressing supply-side constraints, easing investment restrictions, and protecting the purchasing power of Filipino households,” said National Economic and Development Authority Secretary Arsenio Balisacan.
“Amid tight supply conditions, the government must continue implementing measures that enhance the agriculture sector’s productivity, mitigate the impact of El Niño and the persistent spread of African Swine Flu and other pests and diseases, improve the ease of doing business, and protect the poor and vulnerable,” he added.
The DOF, on the other hand, targets to achieve the P4.3 trillion revenue collection goal this year by enhancing tax administration efficiency and pushing for the passage of the DOF’s refined priority tax measures that promote fiscal sustainability without hindering economic growth and aggravating inflation.