Economic growth seen exceeding target this year
THE economy has the momentum for growth and will continue to be among the best performing in the region, Budget Secretary Amenah Pangandaman said Tuesday. "Since the start of the administration, we have made great strides in post-pandemic growth," she said during The Manila Times forum on Tuesday. Pangandaman said the country is expected to outperform China, Indonesia, Malaysia, Thailand and Cambodia, with private consumption as the country's main growth engine. "This will also be supported by steady remittance flows, a healthy labor market and lower inflation," Pangandaman said. "This gives us confidence that the Philippine economy can achieve or even exceed the government's growth target of 6.0 to 7.0 percent for 2024 and even become an upper-middle income country in the near term," she added. Pangandaman said the Development Budget Coordination Committee will meet two weeks from now to adjust the government's growth target for this year until the medium term. Meanwhile, Bangko Sentral ng Pilipinas (BSP) Department of Economic Research Officer in Charge Dennis Lapid said that growth is now largely intact over the medium term, expecting it to settle within target until next year. "We're seeing that domestic demand and GDP (gross domestic product) growth in general have held up much better than we expected [even] when we started tightening monetary policies," Lapid said. He said current data on inflation, domestic demand and the current account translate to generally favorable economic prospects. "So, inflation is coming down, and domestic demand seems to be on a rebound and has proved to be much more resilient than we initially thought," Lapid said. "So this shows some of the output, especially for 2025, suggests that GDP is likely to grow within the government's or the DBCC target for this year of 6.0 to 7.0 percent and next year 6.5 to 7 percent," he added. This projection is an improvement from the previous central bank's baseline forecasts pointing to within-target growth for 2024 and misses for 2025 and 2026. Second-quarter growth came in higher than expected at 6.3 percent on the back of improved government spending. "I think the indication so far that we're getting from our forecasting models is that the third-quarter GDP would likely be more or less similar to what we saw in the second quarter," Lapid said. Meanwhile, Finance Assistant Secretary Neil Adrian Cabiles said the key to boosting economic growth and development is infrastructure spending. "Of course, this generates economic activity, promotes jobs and unlocks markets. For this year, spending is at P1.4 trillion, which is a 3.8-percent growth from last year and about 5.6 percent of GDP," Cabiles said. "Our... program aims to maintain infrastructure spending at above 5.0 percent of GDP annually. So we're well within the threshold, we're well above the threshold rather," he added. Moreover, Cabiles said that slowing inflation and the interest rate cuts from the central bank would provide boosts to the economy. "Given that the downtrend in inflation will allow inflation to settle within the target, it has pointed out enough policy space for the Bangko Sentral to lower its benchmark rates," Cabiles said. "The decrease in interest rates should also provide some boost to consumption as well as investments that have been put off due to the high cost of borrowing in the previous periods," he added. Monetary authorities ordered another 25-basis-point cut at their October meeting, bringing the rates to 6.0 percent. Lapid said the inflation outlook was continuing to improve, and the risk-adjusted forecast for this year was subsequently trimmed to 3.1 percent from 3.3 percent. However, upside risks still linger; hence, they revised the risk-adjusted forecast for 2025 to 3.3 percent from 2.9 percent, and that for 2026 was also hiked to 3.7 percent from 3.3 percent.
Tomas Kauer - Moderator 
THE economy has the momentum for growth and will continue to be among the best performing in the region, Budget Secretary Amenah Pangandaman said Tuesday.
"Since the start of the administration, we have made great strides in post-pandemic growth," she said during The Manila Times forum on Tuesday.
Pangandaman said the country is expected to outperform China, Indonesia, Malaysia, Thailand and Cambodia, with private consumption as the country's main growth engine.
"This will also be supported by steady remittance flows, a healthy labor market and lower inflation," Pangandaman said.
"This gives us confidence that the Philippine economy can achieve or even exceed the government's growth target of 6.0 to 7.0 percent for 2024 and even become an upper-middle income country in the near term," she added.
Pangandaman said the Development Budget Coordination Committee will meet two weeks from now to adjust the government's growth target for this year until the medium term.
Meanwhile, Bangko Sentral ng Pilipinas (BSP) Department of Economic Research Officer in Charge Dennis Lapid said that growth is now largely intact over the medium term, expecting it to settle within target until next year.
"We're seeing that domestic demand and GDP (gross domestic product) growth in general have held up much better than we expected [even] when we started tightening monetary policies," Lapid said.
He said current data on inflation, domestic demand and the current account translate to generally favorable economic prospects.
"So, inflation is coming down, and domestic demand seems to be on a rebound and has proved to be much more resilient than we initially thought," Lapid said.
"So this shows some of the output, especially for 2025, suggests that GDP is likely to grow within the government's or the DBCC target for this year of 6.0 to 7.0 percent and next year 6.5 to 7 percent," he added.
This projection is an improvement from the previous central bank's baseline forecasts pointing to within-target growth for 2024 and misses for 2025 and 2026.
Second-quarter growth came in higher than expected at 6.3 percent on the back of improved government spending.
"I think the indication so far that we're getting from our forecasting models is that the third-quarter GDP would likely be more or less similar to what we saw in the second quarter," Lapid said.
Meanwhile, Finance Assistant Secretary Neil Adrian Cabiles said the key to boosting economic growth and development is infrastructure spending.
"Of course, this generates economic activity, promotes jobs and unlocks markets. For this year, spending is at P1.4 trillion, which is a 3.8-percent growth from last year and about 5.6 percent of GDP," Cabiles said.
"Our... program aims to maintain infrastructure spending at above 5.0 percent of GDP annually. So we're well within the threshold, we're well above the threshold rather," he added.
Moreover, Cabiles said that slowing inflation and the interest rate cuts from the central bank would provide boosts to the economy.
"Given that the downtrend in inflation will allow inflation to settle within the target, it has pointed out enough policy space for the Bangko Sentral to lower its benchmark rates," Cabiles said.
"The decrease in interest rates should also provide some boost to consumption as well as investments that have been put off due to the high cost of borrowing in the previous periods," he added.
Monetary authorities ordered another 25-basis-point cut at their October meeting, bringing the rates to 6.0 percent.
Lapid said the inflation outlook was continuing to improve, and the risk-adjusted forecast for this year was subsequently trimmed to 3.1 percent from 3.3 percent.
However, upside risks still linger; hence, they revised the risk-adjusted forecast for 2025 to 3.3 percent from 2.9 percent, and that for 2026 was also hiked to 3.7 percent from 3.3 percent.
