Q1 GDP growth may miss target

The Philippine economy likely continued its growth momentum in the first quarter, although this may fall short of the government’s target, GlobalSource Partners said.

“The first quarter is likely to sustain positive economic growth which may not necessarily approximate the official target of 6-7% for at least the first quarter of 2024 due to the downside risks to economic growth including the prolonged dry spell and rising trend of inflation,” GlobalSource country analysts Diwa C. Guinigundo and Wilhelmina Mañalac said in a report.

The local statistics authority is set to release first-quarter gross domestic product (GDP) data on May 9.

The GlobalSource report also discussed the results of the central bank’s latest consumer and business expectation surveys, which can be used as an indicator for actual output.

“Consumption spending may receive an additional boost from better consumer sentiment but businesses’ less optimistic expectations may partially hold it back,” GlobalSource said.

The Bangko Sentral ng Pilipinas (BSP) survey showed that consumer sentiment was less pessimistic in the first quarter amid expectations of improved employment and income. Private consumption accounts for about three-fourths of the economy.

On the other hand, businesses were less bullish amid persistent inflation, the impact from the El Niño weather event and sluggish post-holiday demand.

Inflation averaged 3.3% in the first quarter, still within the 2-4% target band. The BSP expects inflation to average 3.8% this year.

Latest data from the Agriculture department showed that agricultural damage from the El Niño has reached PHP 3.94 billion, affecting 73,713 farmers and fisherfolk.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., expects GDP to have expanded by 6.1% in the first quarter.

This would be within the government’s target and faster than the 5.5% GDP growth in the fourth quarter but slower than the 6.4% expansion in the first quarter of 2023.

Mr. Rivera said that growth in the first quarter was likely driven by increased government spending on infrastructure, more public-private partnerships, the recovery of the tourism industry and improvements in exports.

For the first two months of the year, infrastructure spending rose by 6.7% to PHP 120.5 billion, data from the Budget department showed.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said GDP likely grew by 6% in the first quarter. His full-year forecast is 6.3%.

“Philippine GDP growth could normalize to around 5.5%-6.5% in 2024 and beyond,” he said in a Viber message.

This year, economic growth will also be supported by infrastructure spending, strong remittances, and further reopening of the economy, he added. — Luisa Maria Jacinta C. Jocson