The industry sector's growth rate declined to 3.6% from 6.5% in 2023, while household spending decelerated for the fourth consecutive quarter, dropping to 5.6% from 8.3% growth in 2022, according to the data. However, some sectors, such as financial and insurance activities (8.9% growth) and construction (8.8% growth), outperformed others.
The fourth-quarter GDP growth rate of 5.6% followed a 6.0% expansion in the previous three-month period and surpassed the median forecast of 5.4% based on a Wall Street Journal poll of economists. On a seasonally adjusted basis, GDP rose 2.1% compared to the previous quarter.
Despite the relatively strong fourth-quarter growth, economists anticipate sluggish growth in 2024 due to expected interest rate increases and slower government spending. Capital Economics noted that credit growth has cooled down, potentially leading to lower domestic demand growth in the coming quarters. Additionally, slower growth in remittances, which account for about 10% of GDP, is expected to impact consumption negatively. The outlook for the external sector appears grim, with export growth slowing down significantly and likely to continue struggling if global growth softens as predicted.
In conclusion, while the Philippine economy demonstrated resilience in the final quarter of 2023, there are concerns about sustaining this momentum. Given the anticipated factors, such as higher interest rates and weakened global demand, it is likely that the country will experience below-trend growth in the coming quarters.
Note: Fabiana Negrin Ochoa contributed to this report.
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