NextGen Day

The investment banking arm of the Metrobank Group predicts that the Philippine economy will grow by 6% in 2023. This growth will be driven by strong domestic demand as the economy continues to reopen.

In a virtual briefing on Wednesday, Jose Patricio Dumlao, president of First Metro Investment Corporation (FMIC), said that the country’s macroeconomic fundamentals are still strong, even though growth will be slowed by expected external headwinds like slower global growth, high-interest rates and inflation, and continued volatility.

Dumlao said that strong domestic demand was a big reason why the economy grew 7.7% in the first nine months of 2022, even though the global economy was facing some unexpected problems.

Victor Abola, an economist at the University of Asia and the Pacific, said that the services sector will be the main driver of GDP growth this year.

Abola said that economic growth depends on what people buy and how much the government spends.

“On the investment side, infrastructure spending will recover strongly,” he said, calling infrastructure an “important ingredient” of growth.

The FMIC thinks that when the economy reopens and restrictions on people’s movement and business operations are lifted, this will boost household spending, employment, services, and government spending.

But Abola said that food inflation is one of the things that could hurt the economy this year and stop the recovery.

“Analysts are seeing a drop in the price of oil. As we can see, it’s hard to get back to $80 per barrel, so I’m more worried about the possibility that food prices will keep going up locally,” he said.

The FMIC thinks that inflation will stay at 4.5 percent because higher oil prices around the world affect the prices of food and other goods on the local market.

Even though prices went up faster in December, the average inflation rate for the country in 2022 was 5.8 percent.

Last month, the country’s overall inflation rate was 8.1%, which was the highest since November 2008. People say this is because the prices of food and drinks that don’t contain alcohol are going up faster.

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