Economists at First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said the Philippine economy would likely grow above 6 percent in the first quarter of 2024, driven by higher government infrastructure spending.
“The economy looks set to accelerate in 2024, with Q1 GDP [gross domestic product] estimated at 6.1 percent as infrastructure spending goes into high gear with the National Government (NG), buoyed by ODA funding, and PPP projects gain traction,” FMIC and UA&P said in their latest Market Call report.
Their first-quarter growth projection was slower than the actual 6.4-percent expansion in the first quarter of 2023 and the government’s target range of 6.5 percent to 7.5 percent this year.
Finance Secretary Ralph Recto said the Department of Budget and Coordination Committee (DBCC) would likely adjust its macroeconomic assumptions until 2028 to more “realistic” growth targets.
FMIC and UA&P said government spending had a strong start in 2024 after the understandable tentativeness of the different departments at the start of 2023, when the then new administration was in an organizational mode.
“Infrastructure spending, both government-funded [i.e., huge P1-trillion DPWH budget alone] and PPP projects, should accelerate in 2024 as NG bids out and awards large undertakings starting with the recent $3.0-billion Ninoy Aquino International Airport expansion,” the report said.
FMIC and UA&P also said inflation in 2024 should fall within Bangko Sentral ng Pilipinas’ target range of 2 percent to 4 percent, as rice and crude oil prices ease despite occasional spikes.
“We may see YoY inflation reach 3.7 percent in H1, but it should return to under 3.5 percent by Q3,” the report said.
FMIC and UA&P said Philippine exports would likely regain its positive form this year.
“We should see a modest 5 percent to 10-percent increase in exports for 2024 as the global economy recovers. However, the trade deficit will remain above $4-billion per month on average,” the report said.
“But hefty rice imports, transport equipment especially related to ongoing train systems expansion, and crude oil prices remaining elevated despite limited upside should boost imports,” it said.
FMIC and UA&P predicted that the peso would have a brief appreciation run until May, but would then fall as economic growth takes a faster pace.