GROWTH FORECAST. After a slowdown in the second quarter of the year, the Philippine economy is forecast to post higher growth in the third quarter, says Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort on Thursday (Oct. 26, 2023). The growth will likely be driven by higher government spending. (PNA file photo)
MANILA – The Philippine economic growth likely accelerated in the third quarter of the year, driven by the growth in government spending, according to an economist.
In a Viber message to the Philippine News Agency on Thursday, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the economy is projected to grow by 6 percent in the third quarter of the year.
"Philippine GDP (gross domestic product) growth (will be) supported by catch-up spending by the national government, especially on infrastructure, after some underspending earlier in 2023," Ricafort said.
The country’s economic growth slowed to 4.3 percent in the second quarter of the year.
The economic team earlier vowed that the government's final consumption expenditure, which contracted by 7.1 percent in the second quarter, will be ramped up to accelerate economic growth.
Aside from government spending, Ricafort said overseas Filipino workers (OFW) remittances and the good employment data will also support economic growth.
"OFW remittances (were) among record highs in recent months (while) employment data (was) among the best levels since before the pandemic amid the economic reopening narrative with no more large lockdowns since 2022, and the final lifting of the Covid state of public health emergency since July 22, 2023," he said.
He added the further recovery in foreign and local tourism will also create more employment opportunities.
However, Ricafort said offsetting risk factors include the elevated inflation that could reduce consumer spending, and higher interest rates that will increase borrowing costs which "have the unintended consequence of slowing the economy."
He said other risks to growth include the economic slowdown or even recession in the US and other developed countries after aggressive interest rate hikes since 2022.
2023 GDP outlook revision
In a separate report released on Thursday, the First Metro Investment Corporation (FMIC) and the University of the Asia and the Pacific (UA&P) revised upward its full-year economic growth projection for this year.
In the October issue of The Market Call, FMIC and UA&P forecast the Philippine economy to grow by 5.8 percent, higher than the 5.5 percent earlier projection.
"While a certain pessimism has begun to grip fairly large swaths of people, including policymakers and investors, especially amid the boiling geopolitical —i.e., Hamas-Israel, Russia-Ukraine conflicts, and China’s aggressiveness in the East Asia and Southeast Asian region, we do not share such a cloudy view of the economy," the report said.
FMIC and UA&P said the huge rebound in employment in August meant an 80-percent recovery from July losses.
The unemployment rate also fell to 4.4 percent in August from 4.8 percent in July.
"We expect complete rebound by September, and further gains until November," FMIC and UA&P added.
Inflation, meanwhile, is expected to ease in the coming months after accelerating to 6.1 percent in September.
"Both MoM (month-on-month) and YoY (year-on-year) inflation should ease for the rest of the year, as crude oil prices hovered around USD85 per barrel despite the Hamas-Israel conflict and Thai rice prices have begun to slide in September," FMIC and UA&P said. (PNA)
