2023 GDP growth seen at 5.5 percent - PNB analyst




The Manila Times


Business Times

THE country’s gross domestic product (GDP) will reach 5.5 percent this year, according to an analyst, or slower compared to the expected 7.5 percent for 2022. During the British Chamber of Commerce of the Philippines Philippine Economic Outlook for 2023 on Tuesday, Alvin Arogo, Philippine National Bank vice president and research division head, said that this will be mostly caused by the weakening of consumers’ purchasing power, dampening of capital formation due to high interest rates and minimal increase in government expenditures. “For GDP one surprise, I think, is that last year, our revenge spending was stronger than expected. So, although we are expecting and most other economists are expecting that when the government analyzes the GDP number on Thursday (Jan. 26, 2022), it will be around 7.5 percent,” Arogo said. “For this year, however, we are expecting growth to be slower, at about 5.5 percent.” “This is because of three things: Firstly, the consumers’ pandemic savings all being used in 2022, meaning the high prices of goods can no longer be ignored by them; secondly, interest rates are going up starting with the policy rates, which will translate to higher borrowing costs for the government as well as most corporations; lastly, the approved national budget in terms of the year 2023 is slower compared to 2022,” he added. Arogo said that the 7.5-percent projected growth for 2022 was not clearly in the picture at the start of that year, as most of the forecasts were actually lower, primarily during the Russian-Ukraine war. “The war between Russia [and] Ukraine caused a huge commodity spike, and a lot were fearful about how inflation will impact spending. For the Philippines, however, fortunately, it coincided with also the strong reopening of the economy, so at large, although no consumer would like prices to go up because there was so much pent-up demand,” Arogo noted. “This was ignored mostly, and that is why for me, this explains why you’re expecting a very strong economic growth number for 2022 and clearly, a lot of government officials have sounded the same during their economic briefings starting last week,” he added. “As for 2023, 5.5-percent growth is indeed slower in 2023, but this is still decent compared to what is expected in other countries.”