PH economy grows 5.6% in 2023, misses government target

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Photo by REY MELVIN CARAAN on Unsplash
  • The Philippine economy grew by 5.6% in 2023, slightly below the government’s target, amid challenges posed by the global economic landscape
  • Socioeconomic Planning Secretary Arsenio Balisacan said the growth is nonetheless 8.6% higher than pre-pandemic levels, indicating resilience and recovery
  • GDP for the last quarter of 2023 also grew by 5.6%, a decline from the 7.1% growth in the same quarter in 2022 and the revised 6% in the third quarter of 2023
  • Looking ahead to 2024, Balisacan emphasized the need to address supply-side constraints, ease investment restrictions, and protect the purchasing power of Filipino households
  • He urged collaborative efforts between the executive and legislative branches for crucial tax and expenditure reforms to achieve a GDP growth target of 6.5% to 7.5%

The Philippine economy grew 5.6% in 2023, missing government’s target of 6% to 7% for the year and showing a deceleration from the 7.6% growth achieved in 2022.

Socioeconomic Planning Secretary Arsenio Balisacan noted the growth is nonetheless 8.6% higher than pre-pandemic levels, indicating resilience and recovery.

“While this growth is below our target of 6 to 7 percent for this year, this keeps us in the position of being one of the best-performing economies in Asia. Among those that have already released their Q4 2023 real GDP growth figures, we follow Vietnam (6.7 percent) while surpassing China (5.2 percent) and Malaysia (3.4 percent),” he said in a press statement.

The economy for the last quarter of 2023 also grew by 5.6%, a decline from the 7.1% growth in the same quarter in 2022 and the revised 6% in the third quarter of 2023, the Philippine Statistics Authority said.

The National Economic and Development Authority, which Balisacan also heads, attributed the upbeat domestic demand to rapid growth in capital formation and higher household spending but noted a contraction in government expenditures. While full-year domestic demand moderated to 4.8%, the report highlighted the acceleration in total investments to 11.2% in the fourth quarter, resulting in a 5.4% growth for the full year.

Despite positive trends in household consumption, with a 5.3% growth in the fourth quarter and a 5.6% growth for the full year, government spending contracted by 1.8% in the last quarter, resulting in a 0.4% growth in 2023 compared to 4.9% in 2022.

The industry sector’s growth moderated to 3.2% in the last quarter, bringing the sector’s 2023 growth to 3.6%.

The agriculture sector, on the other hand, showed modest growth, recording a 1.4% increase in the fourth quarter of 2023 and a 1.2% growth for the full year.

Balisacan said the weak global economy weighed down on the export sector, which dropped by 2.6% in the fourth quarter, due to the 11.6% contraction in goods exports, even though services exports grew by 12.3%. For the full year, goods exports sank by 7.3%, but services exports grew by 13.6%.

“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,” Balisacan added.

Looking ahead to 2024, he emphasized the need to address supply-side constraints, ease investment restrictions, and protect the purchasing power of Filipino households to achieve the government’s GDP growth target of 6.5% to 7.5%.

In light of tight supply conditions, he stressed the importance of measures to enhance the agriculture sector’s productivity and mitigate the impact of external factors such as El Niño and the persistent spread of African swine flu.

Additionally, Balisacan called for collaborative efforts between the executive and legislative branches to swiftly pass crucial tax and expenditure reforms to expand the government’s fiscal space and promote inclusive growth.