The economy grew 5.6 percent in 2023, slower than in 2022 and below government’s full-year goal.
The average growth last year fell below the 7.6 percent expansion in 2022 as well as the government’s growth assumption of six to seven percent.
Data from the Philippine Statistics Authority (PSA) showed growth slowed 5.6 percent in the fourth quarter of 2023, from 7.1 percent in the same period in 2022.
But the National Economic and Development Authority (NEDA) said the Philippines remains as one of the best-performing economies in Asia.
NEDA Secretary Arsenio Balisacan in a press conference yesterday made the comparison on the fourth quarter 2023 gross domestic product growth figures of Vietnam which recorded a stronger expansion of 6.7 percent; China, stronger at 5.2 percent and Malaysia, 3.4 percent.
The latest PSA data showed government spending contracted by 1.8 percent in the fourth quarter of the year from 6.7 percent growth in the third quarter of 2023.
This brings the full year growth in government spending at 0.4 percent, which Balisacan said was mainly due to the fiscal consolidation program.
“Recall that in 2022, the government spent a lot of resources on the vaccination program on top of the elections held in May. The preceding notwithstanding, we will continue to implement the measures started in the third quarter of 2023 to improve program implementation by the government,” Balisacan said.
Weak global economy
The NEDA chief also said the weak global economy weighed down heavily on our export sector, which declined by 2.6 percent in the fourth quarter.
This was due to the deep contraction in goods exports (11.6 percent), although services exports grew by 12.3 percent.
For the full year, goods exports declined by 7.3 percent, but services exports grew by 13.6 percent.
“We expect the growth in services to maintain its trajectory as international tourism rebounds. We will present international tourists with a pleasant travel experience, beginning with improved airport services, simplified travel requirements and most especially, a diverse range of tourism products,” he added.
The PSA said all major economic sectors, namely agriculture, forestry, and fishing (AFF); industry and services posted year-on-year growths in the fourth quarter of 2023 at 1.4 percent, 3.2 percent and 7.4 percent, respectively.
For the full year, AFF, industry and services also posted growth in 2023 at 1.2 percent, 3.6 percent and 7.2 percent, respectively.
The PSA said main contributors to the fourth quarter 2023 annual growth were financial and insurance activities, 11.8 percent; wholesale and retail trade; repair of motor vehicles and motorcycles, 5.2 percent and construction, 8.5 percent.
Also in 2023, the industries which contributed the most to the annual growth were wholesale and retail trade; repair of motor vehicles and motorcycles, 5.5 percent; financial and insurance activities, 8.9 percent and construction, 8.8 percent.
“We welcome the robust growth in spending for restaurants and hotels, transport and recreation reflecting the improvements in the labor market, and steady growth in remittances. However, we are concerned about the low growth in food spending due to high food prices, though inflation has moderated in recent months,” Balisacan said.
“Moving forward, we need to relentlessly manage elevated food prices, particularly improving the efficiency and resiliency of the agriculture value chain, utilizing strategic trade policy when domestic production is inadequate, and preventing anti-competitive practices in the marketplace,” he added.
Faster growth, curbing inflation
Meanwhile, the government projects faster GDP growth of 6.5 to 7.5 percent in 2024 despite domestic and external headwinds.
In a separate statement, the Department of Finance said the government will continue pushing forward strategies that will boost economic growth and ensure the Philippines remains on track with its medium- to long-term goals.
According to finance secretary Ralph Recto, the first order of business is to “reduce emerging inflation now” to boost private spending.
The Inter-Agency Committee on Inflation and Market Outlook is set to meet on February 16 to align efforts on the timely implementation of direct measures to curb food and non-food inflation.
“Ensuring that prices of goods remain stable and affordable is crucial to further grow the economy, consequently enabling us to boost revenue collection,” Recto said.
P4.3T revenue goal
The finance chief said he targets to achieve the P4.3 trillion revenue collection goal in 2024 by enhancing tax administration efficiency and pushing for the passage of the DOF’s refined priority tax measures that promote fiscal sustainability without hindering economic growth and aggravating inflation.
“Increasing revenues will mean reducing the deficit and our dependence on debt. We will grow the economy by boosting investments. This will broaden the tax base and improve tax collections,” he said.
