Despite strong economic growth in the third quarter, a think tank has predicted a more moderate outlook for the Philippine economy in 2024.
ING Manila’s chief economist, Nicholas Mapa, released a report on Wednesday, linking potential economic shifts to strains in household spending, fiscal spending nearing its limits, and the ongoing tightening cycle of the Bangko Sentral ng Pilipinas. These factors align with forecasts of an imminent global trade slowdown.
Mapa stated in the report that despite the impressive growth report, the pace of GDP growth could moderate next year. He praised the increase in government spending during the period and the growth seen in net exports as drivers of the third-quarter GDP upside surprise.
However, he expressed skepticism about the sustainability of government spending as a reliable source of growth in the coming quarters due to the limited capacity of fiscal authorities to increase spending given the elevated debt levels.
Government underspending was cited as a factor contributing to the economic slowdown in the second quarter. In response, the government accelerated its spending, resulting in a third-quarter increase and aiding the expansion of GDP.
The report also highlighted sluggish growth in household spending since 2011, excluding the influence of COVID-19.
Mapa further commented on inflation, stating that the Bangko Sentral ng Pilipinas would maintain a “hawkish” stance despite the expected softer demand-led price pressures.
He projected that inflation would average 4.1% year-on-year in 2024, driven by supply-side factors such as drought, imported energy price adjustments, and a shortage of fish.
Source: PhilNews24 | December 14, 2023
