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    Economic Issue

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    Economic Issue

    Uploaded by

    johndavepuliran
    This files shows the current economic issue

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    of 3

    Philippines misses official target with

    5.6% GDP growth in 2023


    Latest annual data falls short of 7.6% expansion in previous year

    A public market in Manila's Quezon City. The Philippine economy has been hit
    by soaring inflation. © Reuters
    RAMON ROYANDOYAN, Nikkei staff writer January 31, 2024 11:13
    JSTUpdated on January 31, 2024 14:14 JST

    MANILA -- The Philippine economy fell short of an ambitious growth target


    for 2023 as rising inflation and interest rate hikes dampened household
    spending power.

    Official data released Wednesday showed annual GDP growth came in at


    5.6%, well short of the 7.6% pace in 2022 and missing a government
    target of 6% to 7%.

    The Philippine economy faced multiple hurdles last year including soaring
    food prices and persistent supply chain bottlenecks. The government with
    respond price caps on rice while the central bank hiked interest rates to
    their highest in years in a bid to contain inflation .

    Gross domestic product in the final quarter of 2023 hit 5.6%, weaker than
    7.1% in the same period in 2022.

    "Growth could have been even faster had rates not been raised so
    aggressively," said Nicholas Antonio Mapa, senior economist at ING Bank
    in Manila.

    The Bangko Sentral ng Pilipinas (BSP) currently maintains its benchmark


    lending rate at 6.5%, after an emergency increase of 25 basis points
    (0.25%) in October.

    The government on Wednesday said it would redouble efforts to tame


    growth-sapping inflation.

    The government will be relentless in managing inflation, especially for


    basic commodities such as food," said National Economic and
    Development Secretary Arsenio Balisacan.

    Public spending in the last three months of 2023 contracted by 1.8%,


    compared with a 6.7% expansion recorded in the preceding quarter.
    Balisacan said this decline was due to the government's fiscal
    consolidation program, noting that Manila spent a lot of resources in 2022
    due to its vaccination program and presidential elections.

    Despite this, the government's chief socioeconomic planner said that the
    domestic economy is in need of "lots of investment," particularly the
    agricultural sector, which accounts for about 10% of GDP.

    "We need a lot of investment in agriculture, for warehousing, logistics,


    transport, " Balisacan said. "You need investment in agriculture to raise
    productivity."
    The Philippine agricultural sector expanded by 1.2% in 2023, stronger
    than the 0.5% rise the previous year.

    Miguel Chanco, chief emerging Asia economist for Pantheon


    Macroeconomics, called the 2023 slowdown "natural" due to fading
    benefits from reopening the pandemic-hit economy.

    "The problem is that part of this reopening was fueled by a surge in


    consumer borrowing, which is starting to buckle in some areas, in the face
    of the BSP's aggressive rate-hiking cycle," he told Nikkei Asia.

    Chanco highlighted the COVID pandemic's lingering impact, with


    consumers dipping into savings to cope with price spikes.

    Household consumption in the final quarter grew by 5.3%, as inflation


    decelerated towards the end of 2023. Inflation in the Philippines slowed to
    3.9% in December, but averaged 6% over the entire year.

    Domini Velasquez, chief economist at China Banking Corp. in Manila,


    predicts faster economic growth in 2024 due to decelerating inflation and
    possible interest rate cuts in the second half of the year,

    "However, we note that the economy would still have to contend with
    headwinds such as a global economic slowdown and heightened
    geopolitical tensions," she said.

    Link/Reference: https://asia.nikkei.com/Economy/Philippines-misses-
    official-target-with-5.6-GDP-growth-in-2023#:~:text=MANILA%20%2D%2D
    %20The%20Philippine%20economy,of%206%25%20to%207%25.

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