The Philippine economy likely grew 6.2 percent year-on-year in the first quarter of 2024, according to economists belonging to the University of Asia and the Pacific and First Metro Investments Corp.
“Bolstered by robust economic data for February, we have become a little cautiously optimistic about the economic rebound. We expect GDP to expand by 6.2 percent in Q1, an upward revision from our previous forecast of 6.1 percent,” the economists said in the latest issue of Market Call report.
They said their optimism were founded on record levels of employment, the manufacturing sector showing signs of new life with output accelerating each month since November 2023 to February 2024, and increased infrastructure spending.
“Elevated employment levels in the semester ending in February should buoy GDP faster, as empirical evidence show that employment changes precede GDP movements,” they said.
They also noted that the manufacturing sector’s output has risen faster in each of four months to February, while PMI for March remained expansionary.
Data showed that unemployment rate dropped to 3.5 percent, while the volume of production index (VOPI) grew 8.9 percent year-on-year in February 2024.
“Strong employment gains in the last six months to February provide good basis for GDP growth in the first half, since empirical evidence show that employment gains precede GDP growth,” the economists said.
“NG should be able to ramp up infrastructure spending in huge ODA-supported projects as interest payments take a smaller portion of total expenditures, while PPP projects gain further traction,” they said.
“We also see the strong Q1-2024 organic loan growth of BDO [+13 percent YoY] and BPI [+11.9 percent YoY] providing support for the robust Q1 GDP growth, they said.
The economist said while inflation may speed up to 4.2 percent in the second quarter, it is expected to revert back to the Bangko Sentral ng Pilipinas’ target range of 2 percent to 4 percent by the third quarter.