Philippines economy slows down at 5.6 percent in 2023

THE Philippine economy grew slower at 5.6 percent in 2023, below the government target range of six to seven percent full-year Gross Domestic Product (GDP), the Philippine Statistics Authority (PSA) said Wednesday, January 31, 2024.

The PSA said the country’s gross domestic product (GDP), or the total value of goods and services produced in a certain period, which is the gauge of the growth of the economy, went down to 5.6 percent in the last quarter of 2023, from 6.0 percent in the quarter prior or from July to September.

It has brought the full-year GDP to 5.6 percent, slower than the 7.6 percent GDP recorded in the whole of 2022.

It said the main contributors in 2023’s third quarter GDP were: financial and insurance activities, which stood at 11.8 percent; wholesale and retail trade; repair of motor vehicle and motorcycles both at 5.2 percent; and construction at 8.5 percent.

For the whole of 2023, the agency said the industries that contributed the most to the annual growth rate were wholesale and retail trade; repair of motor vehicle and motorcycles at 5.5 percent; financial and insurance activities 8.9 percent; and construction, 8.8 percent.

In a statement, the National Economic and Development Authority (Neda) said the Philippine economy’s performance for 2023 made the country the second fastest among major emerging economies in Asia, following Vietnam in which GDP stood at 6.7 percent during the said period and ahead of China at 5.2 percent and Malaysia at 3.4 percent.

“The upbeat domestic demand was mainly supported by the strong growth in capital formation and higher household spending but was offset by the contraction in government expenditures. Full-year domestic demand moderated to 4.8 percent as economic activities normalized,” said Neda.

“Growth in household consumption accelerated to 5.3 percent in Q4 2023 from 5.1 percent in Q3 2023, bringing FY 2023 growth to 5.6 percent,” it added.

The agency also noted the 11.2 percent acceleration on total investments in the last quarter of 2023 that resulted in a 5.4 percent growth during the said year, although gross capital formation remained below its pre-pandemic levels.

The government spending also decelerated by 1.8 percent in the last quarter of last year after growing to 6.7 percent in the quarter prior, bringing the full-year 2023 growth to 0.4 percent, far lower than the 4.9 percent in 2022.

“To achieve 6.5 to 7.5 percent growth in 2024 and make growth inclusive, we need to continue addressing supply-side constraints, easing investment restrictions, and protecting the purchasing power of Filipino households,” Neda Secretary Arsenio Balisacan said.

“Amid tight supply conditions, the government must continue implementing measures that enhance the agriculture sector’s productivity, mitigate the impact of El Niño and the persistent spread of African Swine Flu (ASF) and other pests and diseases, improve the ease of doing business, and protect the poor and vulnerable segments of our population from price instability,” he added. (TPM/SunStar Philippines)