The Philippine economy grew by 5.6 percent year-on-year in the fourth quarter of 2023, making the Philippines the second fastest among major emerging economies in the region that have already released their Q4 2023 real gross domestic product (GDP) growth, the National Economic and Development Authority (NEDA) said in a preliminary assessment of the country’s economic performance.

In a Preliminary Assessment of the Country’s Economic Performance for the Fourth Quarter and Full Year 2023 forwarded to the Office of the President, NEDA said, citing Philippine Statistics Authority (PSA) data, that the 5.6 percent year-on-year growth is slower than the revised growth of 6.0 percent in Q3 2023.

On a seasonally adjusted quarter-on-quarter basis, the economy expanded by 2.1 percent, with the latest growth outturn is lower than the 5.7 percent median forecast of private-sector analysts for the period.

For the full-year 2023, the economy expanded by 5.6 percent, short of the government’s 6.0-7.0 percent target, according to NEDA.

Among major emerging economies in the region that have already released their Q4 2023 real GDP growth include Vietnam (6.7 percent) but ahead of China (5.2 percent) and Malaysia (3.4 percent).

NEDA said the upbeat domestic demand was mainly supported by the strong growth in capital formation and higher household spending but was offset by the contraction in government expenditures. Full-year domestic demand moderated to 4.8 percent as economic activities normalized.

Growth in total investments accelerated to 11.2 percent in Q4 2023, a turnaround from the 1.4 percent contraction in Q3 2023, resulting in a 5.4-percent growth in FY 2023, although gross capital formation remained below its pre-pandemic levels.

Meanwhile, growth in household consumption accelerated to 5.3 percent in Q4 2023 from 5.1 percent in Q3 2023, bringing FY 2023 growth to 5.6 percent.

On the other hand, government spending contracted by 1.8 percent in Q4 2023 after growing 6.7 percent in Q3 2023 and 3.3 percent in Q4 2022, bringing the FY 2023 growth to 0.4 percent (from 4.9 percent in FY 2022).

Also according to NEDA, growth in the industry sector moderated to 3.2 percent in Q4 2023 from 5.6 percent in Q3 2023, bringing the sector’s FY 2023 growth to 3.6 percent.

In the agriculture sector, it grew by 1.4 percent in Q4 2023, up from 0.9 percent in Q3 2023, which brings the FY 2023 growth to 1.2 percent.

“To achieve 6.5 to 7.5 percent growth in 2024 and make growth inclusive, we need to continue addressing supply-side constraints, easing investment restrictions, and protecting the purchasing power of Filipino households,” NEDA Secretary Arsenio Balisacan said.

“Amid tight supply conditions, the government must continue implementing measures that enhance the agriculture sector’s productivity, mitigate the impact of El Niño and the persistent spread of African Swine Flu (ASF) and other pests and diseases, improve the ease of doing business, and protect the poor and vulnerable segments of our population from price instability.”

The executive and legislative branches of the government need to collaborate closely for the swift passage of crucial tax and expenditure reforms to help expand the government’s fiscal space, he added. PND