MANILA, Philippines — Think tank Oxford Economics has raised its Philippine growth forecast for the year, citing a faster-than-expected pace of economic expansion in the third quarter, but it will still fall short of the government’s target.
“We expect the 2023 growth to settle at five percent now,” Oxford Economics economist Makoto Tsuchiya said in an email to The STAR.
Prior to this revision, the think tank was anticipating the country’s 2023 gross domestic product (GDP) growth to be at 4.5 percent.
The revision comes as the Philippine economy expanded by 5.9 percent in the third quarter, faster than the 4.3 percent growth in the second quarter.
This brought economic growth in the January to September period to 5.5 percent.
Despite the upgraded forecast, Oxford Economics expects the country’s economic growth to remain below the government’s six to seven percent target for this year.
For the fourth quarter, Tsuchiya said the think tank expects GDP growth to moderate and come in at 3.6 percent.
This forecast is lower than the growth needed in the fourth quarter to meet the government’s full-year target.
National Economic and Development Authority Secretary Arsenio Balisacan said the economy would need to post 7.2 percent growth in the fourth quarter to achieve at least the low end of the government’s six to seven percent target for the year.
Tsuchiya said the economy is expected to post slower growth in the fourth quarter from the previous quarter due to weak external demand.
“We expect the external demand to remain subdued as global economy slows,” he said.
While the recent recovery in semiconductor exports looks robust, he said the think tank expects the global chip upcycle to be gradual, which would keep a ceiling on chip exports.
Electronics, which include semiconductors, continue to account for the biggest share in the country’s merchandise exports.
“Domestically, weak external demand and higher interest rates will weigh on private investment, while private consumption will stay tamed amid the need to rebuild savings and lower confidence due to the aforementioned factors,” Tsuchiya said.
Last week, Balisacan said the 7.2 percent growth needed in the fourth quarter to attain the low end of the government’s economic growth target remains doable, citing room to accelerate government spending and the anticipated consumption spending in the Christmas season.