The Philippine economy grew by 5.6 percent in the fourth quarter of last year, bringing the full-year 2023 growth to 5.6 percent.

While the growth did not settle within the government’s 6 to 7 percent target and was lower than the 7.6 percent expansion in 2022, National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said the Philippines was still “one of the best-performing economies in Asia.”

“Among those that have already released their Q4 (fourth quarter) 2023 real GDP (gross domestic product) growth figures, we follow Vietnam (6.7 percent) while surpassing China (5.2 percent) and Malaysia (3.4 percent),” Balisacan said in a briefing on Wednesday.

Balisacan added that the full-year GDP expansion last year was also 8.6 percent higher than the pre-pandemic levels.

PSA Undersecretary and National Statistician Dennis Mapa said all major economic sectors which include agriculture, forestry, and fishing, industry, and services, grew by 1.4 percent, 3.2 percent, and 7.4 percent, respectively.

On the demand side, household final consumption expenditure grew by 5.3 percent while gross capital formation also expanded by 11.2 percent.

Balisacan said household spending was driven by the robust growth in spending for restaurants and hotels, transport, and recreation.

He said this was due to the improvements in the labor market and growth in remittances.

Imports of goods and services also grew by 2.9 percent.

Government final consumption expenditure contracted by 1.8 percent. Year-on-year, it grew by 0.4 percent.

Balisacan said government spending in 2022 was high due to the national elections and the ramped up vaccination program.

“It was intentional that the growth in government spending for 2023 was not that high because we wanted to achieve that fiscal consolidation which means lowering the fiscal deficit and the government debt but still are able to provide enough for social protection,” he said.

“The foregoing notwithstanding, we will continue to implement the measures started in Q3 (third quarter) 2023 to improve program implementation by the government. This includes the adoption of the Integrated Financial Management Information Systems by all government instrumentalities, as directed by Executive Order 29, s. 2023,” he added.

2024 outlook

Balisacan said that for now, the government is sticking to its 6.5 to 7.5 percent target this year.

“The DBCC (Development Budget Coordination Committee) will be meeting soon given this new data, to assess, reassess its programs and assumptions, but the way we see it, I don’t think that giving up your ambition this early… it’s only the first (quarter) of the year and now you want to say reduce your 6.5, that’s too defeatist,” he said.

Moving forward, Balisacan assured the public that the government will continue to implement programs and reforms that will accelerate economic growth.

He cited the need to encourage expansion in the construction industry, agriculture sector, and encourage more tourists to visit the Philippines.

“Skills training programs will need to be expanded, both in scope and coverage, to ensure an adequate supply of construction and related workers,” he said.

For the agriculture sector, Balisacan said there is a need to improve the competitiveness of the sector using research and development, cutting-edge technology, upgraded post-production facilities, value-adding investments, and improved packaging and marketing.

“To ensure that we have the fiscal resources to implement the strategies outlined above, the government will streamline, digitalize, and enhance our tax administration systems by implementing the Ease of Paying Taxes Act,” he said.

“We will also optimize the use of resources by strengthening the linkages of planning, budgeting, and operational units within and among agencies. At the same time, we will work with legislators to enact new revenue-generating measures to build a strong fiscal foundation,” he added.

IMF projection

The International Monetary Fund (IMF), meanwhile, also expects Philippine economic growth to remain strong this year.

In its World Economic Outlook update released late Tuesday, the IMF revised upward its 2024 Philippine economic growth projection.

“Real GDP growth for 2024 was revised up slightly to 6.0 percent from the October 2023 WEO forecast of 5.9 percent, reflecting slightly stronger than expected recovery in investment and exports,” IMF resident representative to the Philippines Ragnar Gudmundsson said.

“GDP growth is expected to remain at around 6 to 6.5 percent over the medium term, making the Philippines one of the strongest performers in the region and globally,” he noted. (PNA)