Despite higher interest rates and the threat of a global recession, Albay Rep. Joey Sarte Salceda said GDP growth for this year could hit the low end of the Development Budget Coordination Committee’s (DBCC) target.
“Overall, it will be hard to match 2022 growth rates this year. More likely than not, growth will be within 5.5 to 6.5 percent—which is still an overwhelmingly positive performance,” Salceda said during the 2023 Economic Briefing organized by the Management Association of the Philippines (MAP) on Wednesday in Taguig City.
The chairman of the House Committee on Ways and Means said the “key headwind” for 2023 will be inflation, which he said, “could dampen consumer spending and erode wages.”
Salceda told reporters on the sidelines of the economic briefing that given the “renewed interest” in the country, a 6-7 percent GDP growth rate is “actually doable.”
The lawmaker said the growth drivers for this year will be consumer demand and the country’s ability to “suck income” from abroad through the business process outsourcing (BPOs), overseas Filipino workers (OFWs), and independent contractors or freelancers.
Department of Budget and Management (DBM) Secretary Amenah F. Pangandaman said last December 2022 that she is confident that the government will reach the GDP growth target of 6-7 percent set by the DBCC for 2023 despite the external headwinds.
According to the Philippine Statistics Authority (PSA), the Philippine economy grew by 7.6 percent in 2022.
However, PSA reported on Tuesday that inflation reached 8.7 percent in January, the highest in 15 years or since November 2008 when inflation clocked in at 9.1 percent.
Ateneo Center for Research and Development (ACERD) Associate Director Ser Percival K. Peña-Reyes told the BusinessMirror that should inflation continue to outpace the country’s GDP growth, this could lead to job losses.
“If inflation continues to outpace GDP growth, it could dampen consumer spending and trigger a wage-price spiral,” Peña-Reyes told this newspaper. “Maaaring magbawas ng trabaho [Jobs may be shed] if wages [production costs] go up.”
As for the growth drivers, Salceda said businesses continue to expect demand. “Gross domestic capital formation in durable equipment continued to grow, especially in water transport and textile machinery.”
“Nonetheless, signs also point to expectations of slightly slower growth in 2023 compared to 2022,” the lawmaker added.
Meanwhile, Salceda said revenge spending could “cool down” in the first quarter before recovering during the 2nd quarter of the year.
“Remittance-driven consumption could slow on a quarter-on-quarter basis. Historically, OFWs send less money during the first quarter of a new year than they did during the last quarter of the previous year,” he said.