An economist on Thursday said the domestic economic growth of 6.4 percent in the first quarter of 2023 surpassed expectations and is in line with normalizing base effects.<\/p>\n
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said base effects played a big part in the slower growth, as measured by gross domestic product (GDP), in the first three months this year \u201cas there have been no more large lockdowns since 2022; compared to some pocket of lockdowns in 2021 that created a lower base\/denominator for 2022,\u201d<\/p>\n
The GDP expanded by 7.1 percent in the fourth quarter of 2022.<\/p>\n
\u201cThus, as a result of normalizing base\/denominator effects (also after the one-time election-related spending for 2022), Philippine GDP growth for the coming quarters could normalize further to around 5.5-6.5 percent for 2Q-4Q (second quarter to fourth quarter) 2023 and for full year 2023 and beyond,\u201d he said.<\/p>\n
Ricafort said favorable demographics remain among the economy\u2019s growth drivers, noting that majority of the country\u2019s more than 110 million population is \u201calready at working age since 2015.\u201d<\/p>\n
\u201cBefore the pandemic, Philippine economic\/GDP consistently grew by at least 6 percent from 2012-2019 due to the demographic sweet spot\/dividend,\u201d he said.<\/p>\n
Ricafort said one of the biggest growth drivers of the domestic economy in the first quarter this year is the lower individual income tax rates, which is part of the Tax Reform for Acceleration and Inclusion (TRAIN) law.<\/p>\n
He said the lower tax rates for most income brackets starting in January this year increased workers\u2019 take home pay by around 3 to 5 percent.<\/p>\n
\u201cThis could lead to increased consumer spending, which accounts for at least 75 percent of the economy, and, in turn, lead to faster economic\/GDP growth; to also help ease the adverse effects of higher prices\/inflation recently,\u201d he added.<\/p>\n
Ricafort said the expected easing in the rate of price increases in the coming months, with monetary authorities eyeing the return of inflation rate to within the government\u2019s 2 to 4 percent target band starting in the last quarter of this year, is also a plus to domestic economic output.<\/p>\n
He, however, said risks to inflation remain and these include the impact of looming El Ni\u00f1o, which is expected to lower agricultural output and increase prices.<\/p>\n
Authorities said the dry spell is seen to start around June or July this year and last until the first quarter of 2024.<\/p>\n
\u201cPossible cut in Fed (Federal Reserve) and local policy rates for the coming months of 2023 and in 2024 would also help reduce borrowing\/financing costs and, in turn, support faster economic\/GDP growth,\u201d he added. (PNA)<\/p>\n","protected":false},"excerpt":{"rendered":"
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