Economists from First Metro Investment Corp. (FMIC) and University of Asia & the Pacific (UA&P) said Tuesday they expect inflation to average 3.2 percent in the first quarter of 2024 amid easing food prices.
They noted in the latest “Market Call” report that the forecast could go even lower if other food prices remain soft.
“Various methodologies do show a definitive easing in inflation. Food prices, except for rice, have stabilized or declined while crude oil prices have quickly headed south after every major event that got traders nervous. Thus, we expect Q1-2024 to average 3.2 percent YoY, partly due to a high base a year ago, but despite elevated rice prices, we still think full year inflation would settle within the BSP target at 3.8 percent,” they said.
The economists said that aside from easing inflation rate, which would spur consumer spending, the robust infrastructure spending should also help boost the domestic economy.
The national government capital outlays should again reach at least 5 percent of the gross domestic product in 2024 while construction of big-ticket infrastructure project under the Public-Private Partnership should accelerate this year, they said.
Meanwhile, the positive job data will also fuel the growth of the economy.
The government reported that unemployment rate hit an 18-year low of 3.6 percent in November 2023, and that 1.8 million additional workers were employed during that month.
“Although we expect a seasonal slowdown in December and January, the upward trend in both the labor participation rate and employment exhibited in H2-2023 should continue in 2024,” they said.
The peso will likely trade sideways in first quarter of the year but resume its depreciation trend after, as the trade deficits remain above $4 billion a month, and as BSP will likely start rebuilding its gross international reserves.
UA&P and FMIC said the economic data released in December 2023 and early January 2024 provide more than sufficient reason to be more optimistic in 2024.
Given these factors, the economists expect the economic growth to accelerate to 6 percent in 2024 from about 5.5 percent last year.