Manila — The Philippine economy is expected to see accelerated growth in the third quarter of this year, supported by an increase in government spending, overseas Filipino workers' remittances, and positive employment data, according to economists.
According to a new release by the Philippines News Agency, chief economist Michael Ricafort conveyed in a Viber message to the Philippine News Agency that the nation's economy is projected to grow by 6% in Q3 2023. This follows a slowdown to 4.3% in the previous quarter.
Ricafort stated that the growth is likely to be spurred by "catch-up spending by the national government, especially on infrastructure," addressing previous underspending earlier in the year. The government's final consumption expenditure, which contracted by 7.1% in the second quarter, is also expected to be ramped up to stimulate economic activity.
In addition to government spending, other contributing factors include strong remittances from overseas Filipino workers and good employment data. "OFW remittances were among record highs in recent months, and employment data was among the best levels since before the pandemic amid the economic reopening," Ricafort said.
Tourism is also expected to add to employment opportunities as both local and foreign tourism show signs of recovery. However, Ricafort warned that elevated inflation and higher interest rates could pose risks, possibly reducing consumer spending and slowing down the economy.
In a separate report, First Metro Investment Corporation (FMIC) and the University of the Asia and the Pacific (UA and P) have revised their full-year economic growth projection for 2023 upward to 5.8%, from the 5.5% previously forecasted. The report also highlighted a decline in the unemployment rate to 4.4% in August from 4.8% in July, and the expectation of easing inflation in the coming months.
Both reports suggest a cautiously optimistic view despite global geopolitical tensions, including conflicts in the Middle East and East Asia, which have been a source of concern for policymakers and investors.