First quarter GDP growth could miss target

The Philippine economy is likely to have continued its growth momentum in the first quarter, although this may fall short of the government’s target, GlobalSource Partners said.

“The first quarter is likely to maintain positive economic growth, not necessarily close to the official target of 6-7% for at least the first quarter of 2024, due to downside risks to economic growth, including prolonged drought and the rising trend of inflation. ” GlobalSource country analysts Diwa C. Guinigundo and Wilhelmina Mañalac said in a report.

The local statistical authority will release first-quarter gross domestic product (GDP) data on May 9.

The GlobalSource report also discussed the results of the central bank’s latest consumer and business expectations surveys, which can be used as an indicator of actual output.

“Consumer spending could get an extra boost from better consumer confidence, but less optimistic expectations from companies could partly hold this back,” GlobalSource said.

The Bangko Sentral ng Pilipinas (BSP) survey showed consumer sentiment was less pessimistic in the first quarter, amid expectations of improved employment and incomes. Private consumption represents about three-quarters of the economy.

On the other hand, companies were less optimistic due to persistent inflation, the impact of the El Niño weather event and weak demand after the holidays.

Inflation averaged 3.3% in the first quarter, still within the target range of 2-4%. The BSP expects inflation to average 3.8% this year.

The latest data from the Department of Agriculture shows that agricultural damage caused by the El Niño has reached P3.94 billion, affecting 73,713 farmers and fishermen.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., expects GDP to have grown 6.1% in the first quarter.

This would be within the government’s target and faster than the 5.5% GDP growth in the fourth quarter, but slower than the 6.4% growth in the first quarter of 2023.

Mr Rivera said growth in the first quarter was likely driven by higher government spending on infrastructure, more public-private partnerships, the recovery of the tourism industry and improvements in exports.

In the first two months of the year, infrastructure spending rose 6.7% to 120.5 billion euros, budget department data showed.

Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said GDP likely grew 6% in the first quarter. His full year forecast is 6.3%.

“Philippine GDP growth could normalize to around 5.5%-6.5% in 2024 and beyond,” he said in a Viber message.

This year, economic growth will also be supported by infrastructure spending, strong remittances and further reopening of the economy, he added. — Luisa Maria Jacinta C. Jocson