MANILA – Sun Life Investment Management and Trust Corporation (SLIMTC) projects Philippine economic growth to accelerate next year, driven by consumption and ramped up government spending.
In a recent interview, SLIMTC president and chief investment officer Michael Enriquez said economic growth will likely hit 5.6 percent this year and accelerate to 6 percent in 2024.
"2023 [economic growth projection] is 5.6 percent. This was an upgrade from 4.8 percent because of the third quarter upswing. We all know what happened in the third quarter, everybody was surprised because [the] government accelerated spending," he said.
The Philippine economy grew by 5.9 percent in the third quarter of the year.
Government final consumption expenditure, which accelerated to 6.7 percent, was one of the main drivers of growth.
For 2024, Enriquez said consumption will still be a main driver.
"The one that will bring it higher would be accelerated spending of the government and then higher exports," he said.
"It's really the government that can boost GDP (gross domestic product). On the capital formation, the private side, we have been noticing slow takeup of loans for obvious reason, [it's] so expensive to borrow money that's why, there's a slowdown on that so the government needs to be the one to take up the slack and I think they're doing it but I think they should have done it earlier," he added.
Enriquez, meanwhile, forecasts headline inflation to settle at 6 percent this year and slow down to 3.7 percent next year.
He said that with inflation easing, the Bangko Sentral ng Pilipinas may start cutting rates starting in the second quarter of 2024.
“As inflation continues to go down, I think we're in consensus that starting with [the] second quarter, we may see rate cuts and I think this is also aligned with how the Fed(eral Reserve) is poised to cut rates as well by H2 (second half) of next year," he added. (PNA)