HIGHER GROWTH. University of Asia and the Pacific economist Victor Abola says in a briefing in Makati on Thursday (Jan. 11, 2024) that Philippine economic growth is expected to accelerate this year. He also said President Ferdinand R. Marcos Jr.'s policies will help boost growth. (Photo by Leah Gonzales)
MANILA – President Ferdinand R. Marcos Jr. has so far been good in managing the Philippine economy as his policies and priorities on utilities, infrastructure and agriculture are expected to further boost economic growth.
"My assessment is that overall, I think (President) BBM (Bongbong Marcos) has performed well, good," University of Asia and the Pacific economist Victor Abola said in a briefing in Makati on Thursday.
"For water, we are fortunate that the Kaliwa Dam construction is going on and gaining traction," he added.
The New Centennial Water Source-Kaliwa Dam Project, which is expected to be fully operational by 2027, is projected to generate 600 million liters of water per day.
Aside from water, Abola said the Marcos administration is also ramping up infrastructure spending.
"Infrastructure spending is, and will continue to be, 5 percent of GDP (gross domestic product) during this year. Now, take note that infrastructure spending and when done by the private sector, that is PPP (Public-Private Partnership) basis, is not included under public construction," he said. "So the 5 percent is like the minimum. And we have, you see, some of the projects that are very large under PPP."
Abola said that in terms of agriculture, the Marcos administration, through the Department of Agriculture and National Irrigation Administration, are already ramping up efforts to rebuild irrigation systems and ensure stable rice supply.
"I think that PBBM is generally positive for the economic growth of the country," he said.
For this year, Abola and the First Metro Investment Corporation (FMIC) expect Philippine economic growth to accelerate to 6 percent driven by robust consumption, increased government infrastructure spending, strong labor market and recovery of domestic tourism.
Abola said inflation is also expected to ease to 3.8 percent this year, aligned with the BSP’s target range of 2 to 4 percent which will bring the much-needed respite for household income.
The FMIC, however, noted that the economy will continue to face headwinds this year.
"This year, we continue to anticipate external headwinds - global growth outlook remains subdued. While headline inflation has softened in many countries driven by the decline in food and energy prices, core inflation remains a concern," FMIC president Jose Patricio Dumlao said.
"External uncertainties such as the movements of the Fed and a potential sharper slowdown in China could drag on growth. Amidst all this, the country’s economy, with its strong macroeconomic fundamentals, is expected to expand by 6 percent," he added.
The peso, however, will remain under pressure due to persistent uncertainties on when and by how much the Fed will cut policy rates.
It is projected to trade within the PHP56 to PHP58 range against the US dollar.
Following a cumulative 100-basis point increase in policy rates over the past year, interest rates are anticipated to decline underpinned by a decrease in inflationary pressure.
Abola said the Bangko Sentral ng Pilipinas will likely cut rates by 25 basis points starting in June this year.
The FMIC, meanwhile, said the Philippine Stock Exchange index (PSEi) is bound to stage a recovery this year driven by improving investor sentiment and easing equity risk premium arising from declining inflation and interest rates, and resilient double-digit corporate earnings.
It is expected to hit 7,000 to 7,500 this year. (PNA)
