6%-7% GDP growth target still achievable -economist

By Anna Leah Gonzales

August 11, 2023, 2:49 pm

<p>RCBC chief economist Michael Ricafort <em>(PNA file photo)</em></p>

RCBC chief economist Michael Ricafort (PNA file photo)

MANILA – The country’s 6 to 7 percent economic growth target for this year is still attainable, an economist said on Friday.
"[It's] still possible," Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort told the Philippine News Agency (PNA) in a Viber message, citing the need to increase government spending and to further lower inflation.
Philippine economic growth slowed to 4.3 percent in the second quarter of the year from 6.4 percent in the first quarter.
The slower growth during the quarter was attributed to the effects of interest rate hikes, inflation, and a slowdown in government spending.
To achieve the growth target this year, Ricafort said the government may help boost further utilization of the budget, especially for the underspending agencies.
"Also, other than the government underspending, there is also a need to further lower inflation since these have been a drag on spending, especially consumer spending, whose share of GDP (gross domestic product) shrank to 68.8 percent versus 75 percent in the previous quarter," he said.
Ricafort also cited the need to eventually bring down policy rates as higher interest rates also dragged on investments.
The Bangko Sentral ng Pilipinas hiked policy rates by a total of 425 basis points due to high inflation.
Headline inflation, which reached as high as 8.7 percent in January, already decelerated to 4.7 percent in July.
In a separate statement, Ricafort said that in the coming quarters, economic growth could settle at 5 to 6 percent levels.
"The 4.3 percent GDP growth in second quarter 2023, the slowest since first quarter of 2021, could mathematically be the slowest for 2023 due to the relatively much higher base after the presidential, national, and local elections a year ago given the one-time nature of election-related spending that is absent this year," he said.
"For the coming quarters of 2023, GDP growth could normalize more sustainably at the 5%-6% levels, in view of the continued normalization of (the) GDP base,” he added. (PNA)