FMIC, UA&P: Domestic Demand Will Drive PH Growth in 2023

The First Metro Investment Corp. (FMIC) and the University of Asia and the Pacific (UA&P) said in a joint report the Philippines will not suffer a sharp global economic slowdown due to a strong reliance on domestic demand.

“As we have stressed, domestic demand which expanded by 9.5% year-on-year in Q3-2022 has continued to recent economic gains. We don’t expect a deep slowdown in consumer spending,” the report said.

Furthermore, FMIC and UA&P said the acceleration of investment spending on infrastructures and capital goods will also support economic growth in 2023.

“The recently revised Public Service Act (PSA) has reduced what may be considered as ‘public utilities’ and encourages foreign investors to go into power, airports, and other infrastructures with 100% equity,” the report said.

FMIC and UA&P said the jobless rate will remain above expected levels and sufficient to keep consumer spending going.

Inflation is expected to ease down to around 6% in the first quarter of 2023 from the 8% rate in November. FMIC and UA&P said this was due to the weaker demand for crude oil and commodities amid the global recession.

Socioeconomic Planning Secretary Arsenio M. Balicasan said earlier this year that the economy’s growth performance this year is likely to surpass the government’s growth assumption for 2022.

The Development Budget Coordination Committee (DBCC) has set a target range of 6.5% to 7.5% for 2022. The country has already recorded a 7.7% growth rate for the first three quarters of the year.

“Given the indications that we are seeing in the fourth quarter, it’s likely going to exceed even the upper limit of that range. We expect to see robust growth in the fourth quarter,” Balicasan said.

However, the DBCC recently revised its growth assumption for 2023 from 6% to 7% due to global headwinds such as the slowdown in major advanced economies.

“We are aware of the global headwinds, particularly the very likely recession for many advanced economies and the persistence of the problems with the supply chain, particularly in relation to the ongoing war in Ukraine, and so there are still uncertainties there,” Balicasan said.

Source: Manila Bulletin