Budget Secretary Amenah Pangandaman announced on Wednesday that the Philippines is making significant progress towards achieving its medium-term economic growth target, despite facing challenges in fiscal gains. Pangandaman stated during The Manila Times Forum at the Sheraton Manila Hotel that the Philippines has emerged as one of the fastest-growing economies in Southeast Asia, surpassing the projections of multilateral organizations. This achievement instills confidence that the Philippine economy can overcome global uncertainties and still reach the government’s goals over the medium term.
In 2023, the country’s economy expanded by 5.6 percent, outpacing China (5.2 percent) and Malaysia (3.4 percent), but falling behind Vietnam (6.7 percent). However, this growth fell short of the government’s target range of 6 to 7 percent. Finance Secretary Ralph Recto acknowledged the need to revise macroeconomic assumptions due to last year’s below-target growth.
To address this, the Development Budget Coordination Committee (DBCC) revisited the medium-term macroeconomic assumptions, adjusting the growth outlook for 2024 to 6.5 to 7.5 percent. The previous target range of 6.5 to 8 percent is now limited to the years 2025-2028. Despite these revisions, Pangandaman emphasized that the medium-term growth forecasts remain unchanged, and the government is committed to working diligently to achieve its targets. However, she also highlighted that the DBCC continuously monitors economic indicators and is prepared to revise strategies if necessary.
Pangandaman pointed out positive developments in the labor market, with the unemployment rate dropping to 3.1 percent in December—the lowest recorded jobless rate since 2005—which translates to 1.60 million employed Filipinos. Full-year unemployment for 2023 was also lower at 4.3 percent compared to 5.4 percent in 2022. In December, 50.52 million Filipinos were employed, indicating a positive trend in job creation.
Inflation is also on a downward trajectory, with the rate decreasing from 3.9 percent in December to 2.8 percent in January. With favorable indicators, it is expected to settle within the target range of 2 to 4 percent for this year. The improving conditions prompted the Bangko Sentral ng Pilipinas (BSP) to revise its risk-adjusted 2024 inflation forecast to 3.9 percent from 4.2 percent, while increasing the forecast for 2025 to 3.5 percent from 3.4 percent. The baseline forecast for this year was adjusted to 3.6 percent from 3.7 percent, while the 2025 projection remained at 3.2 percent.
Pangandaman highlighted that the government is implementing programs, policy directions, and reforms to stimulate economic growth and achieve prosperity. The International Monetary Fund (IMF) Resident Representative for the Philippines, Ragnar Gudmundsson, forecasted a 6 percent rebound in Philippine fiscal growth this year. Gudmundsson believes that growth will be supported by increased public investment and improved external demand for Philippine exports. He also mentioned that the recovery of private investment may take time due to excess real estate inventory, but the government’s infrastructure program, the opening of sectors to foreign direct investment, and private sector participation through public-private partnerships (PPPs) will gradually attract private investment and contribute to a growth potential of around 6.5 percent over the medium term.
Another economic expert, Ndiame Diop, the World Bank Country Director for Brunei, Malaysia, the Philippines, and Thailand, has a slightly lower forecast of 5.8 percent for the country this year. Diop believes that strong momentum in the services sector, individual tourism, and the labor market will support this forecast.
In conclusion, despite falling short of the government’s growth target, the Philippines has made remarkable progress in its economic expansion. The government remains committed to achieving its medium-term goals by closely monitoring economic indicators and making necessary revisions to strategies. Positive developments in the labor market, declining inflation, and the implementation of programs and reforms are expected to contribute to the country’s economic growth. With the support of international organizations and experts, the Philippines is well-positioned to continue its upward trajectory and overcome challenges in the pursuit of prosperity.
Source: The Manila Times
