Economy seen growing 5.6% this year

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The  economy is seen to grow by 5.6 percent this year, according to Sun Life Investment Management and Trust Corp. (SLIMTC), with the economy’s performance for 2023 highly dependent on government’s spending.

The 5.6 percent forecast for the full year is already an upgrade from the previous projection of 4.8 percent, mainly due to the third quarter upswing of the economy after the government’s implementation of its spending catch-up plans, SLIMTC president and chief investment officer Michael Enriquez told reporters on the sidelines of an event held in Taguig last week.

“It’s really the government that is the one that can really boost GDP (gross domestic product). On the capital formation, the private side, we’ve been noticing slow take up of loans for obvious reasons, it’s so expensive to borrow money,” Enriquez said.

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“The government needs to be the one to take up the slack, and I think they’re doing it, but I think they should have done it earlier and they’re playing catch up now,” he added.

SLIMTC’s forecast, however, still falls below the government’s full-year projection of six to seven percent.

The average growth rate of the Philippine economy for the first nine months of the year is 5.5 percent, which falls below the administration’s growth assumption for 2023.

To achieve the lower end of the target range of six percent, the economy needs to grow this quarter by at least 7.2 percent.

For 2024, Enriquez said the economy could grow faster at six percent, with next year’s performance to be driven by consumption, accelerated spending by the government and higher exports.

Meanwhile, Enriquez sees inflation averaging six percent for the year, then easing to about 3.7 percent next year.

“As inflation continues to go down, I think we’re with consensus that starting the second quarter, we may see rate cuts, and I think this is also aligned with how the Fed is poised to cut rates as well by second half of next year,” Enriquez said.

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