MANILA – Fitch Solutions unit BMI has seen a rebound in investments that will continue in 2024, supporting the Philippine gross domestic product (GDP) growth for the year.
In a commentary released to the media Thursday, BMI said the 11.2-percent growth in investment in the fourth quarter (Q4) of 2023 from a contraction of 1.4 percent in the previous period was the “biggest surprise.”
“Fixed capital investment contribution rose from 1.8 pp (percentage points) in Q3 (third quarter) to 2.2 pp in Q4, even as the Bangko Sentral ng Pilipinas (BSP) kept domestic financial conditions at their tightest in over a decade,” BMI said.
“With the growing possibility of rate cuts in H2 (second half), we could see a sustained rebound in investment activity over the coming quarters,” it added.
Government data showed that President Ferdinand R. Marcos Jr. bagged around PHP4.019 trillion in investment pledges from his official business trips. The Board of Investments said PHP22 billion of those commitments were already operational.
Moreover, following the 5.6 percent GDP growth for the full year of 2023, slightly lower than its forecast of 5.7 percent but higher than the consensus expectations of 5.2 percent, BMI has maintained its economic growth outlook for the Philippines at 6.2 percent for 2024.
“The latest growth figures reflect the resilience of the Philippine economy and we think that this momentum will continue going into the new year,” BMI said.
It added that household spending will continue to fuel the Philippine economy, especially the unemployment rate dropped to its decade-low of 3.6 percent in November, which is expected to boost domestic consumption.
Private consumption is also seen to contribute to the domestic economy as inflation pressures ease.
However, downside risks remain in the external factor, particularly exports which declined its contribution to the GDP in Q4 2023.
“Given our expectations for global growth to slow further from 2.5 percent in 2023 to 2.1 percent in 2024, a turnaround in trading activity is unlikely to materialize,” it added. (PNA)
