Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the Philippines is likely to hit its 6-7% economic growth target this year despite the possible effects of the expected El Nino weather phenomenon.
Ricafort said the 6% to 7% gross domestic product (GDP) expansion is possible amid easing year-on-year inflation that could help reduce the drag of higher prices on economic growth.
“Fed (US Federal Reserve) and local policy rates could also be reduced later this year and into 2024 amid easing inflation, and as the economy further reopens towards greater normalcy with no more lockdowns as a policy priority,” he said.
Inflation reached as high as 8.7% in January. It has, however, started to decelerate and settled at 6.6% in April. He said the possible effects of El Niño later this year and up to 2024 could reduce agricultural output and lead to some pick up in prices, “but would not have a significant drag on GDP growth.”
“Philippine economic growth is expected to be among the fastest in Asia and among major economies around the world amid favorable demographics of the country with more than 110 million Filipinos, majority of Filipinos already at working age, (and) young average age of less than 25 years old, all of which would support GDP growth of at least 6%-7% in the coming years,” he added.
Ricafort noted that other possible growth drivers are increased consumer spending due to lower individual income tax rates, high overseas Filipino workers’ remittances, further increase in government spending, the continued growth of business process outsourcing, and the resumption of foreign tourism.
Earlier, the National Economic and Development Authority said that among major emerging economies in the region that have released their 2023 first quarter GDP growth so far, the Philippines grew the fastest with 6.4%, followed by Indonesia (5%), China (4.5%), and Vietnam (3.3%).