The economy could grow faster at 6.1 percent in the first quarter as the forecast remains upbeat due to higher government spending and exports and lower rice prices,First Metro Investment Corp. (FMIC) said Monday.

“With actual national government spending in 2023 exceeding the program by 2 percent, we think the Marcos administration will start 2024 with a bigger bang compared to 2023,” FMIC said in its market call analysis.

The economy in the fourth quarter of 2023 grew slower by 5.6 percent from 5.9 percent in the third quarter, partly due to sustained robust household consumption amid lower inflation rates, data from the Philippine Statistics Authority show.

Breaking down the year-on-year growth recorded by the government in December, FMIC said expenses on capital resources climbed by 12.7 percent, signaling long-term economic growth.

“Non-tax revenues saved the day since its intake overwhelmed its target by P203.8 billion or 106.7 percent above the baseline,” FMIC explained.

This year, it expects major government infrastructure projects to rise sooner as the Marcos administration also maximizes loans from the official development assistance of foreign governments and global financial institutions.

“The national government could have greater confidence in starting to spend early in the year to support the economic recovery,” FMIC said.

President Ferdinand Marcos Jr. approved a P5.768-trillion budget for this year, while aggressively promoting public-private partnerships to support major infrastructure projects amounting to P9 trillion.

Exports grow

“2024 exports will likely rebound as January’s faster-than-expected growth was underpinned by robust US economic growth and Eurozone’s rally,” FMIC said.

Citing data from the statistics authority, FMIC shared January exports rose to $5.9 billion or by 9.1 percent from a negative growth of 5 percent in December year-on-year.

Top exports were coconut oil with nearly 30 percent growth, followed by gold (26 percent) and electronics (13 percent).

The US received the most Philippine exports, posting 16.1 percent growth. This was followed by Japan (15 percent), Hong Kong (13 percent), and China (10.5 percent).

Easing inflation

FMIC sees average inflation in the first quarter to settle at 3.2 percent, lower than its full-year estimate of 3.8 percent, due to declining prices of rice and oil exports.

“We don’t see a repeat of the spike in February as Thai rice prices have slipped by 3.5 to 4 percent from end-January,” FMIC said.

Government statistics show rice prices rose to 23.7 percent last month from 22.6 percent year-on-year amid El Niño and restrictions on rice exports by neighboring countries.

This brought February’s overall inflation to 3.4 percent from January’s 2.8 percent.

The Bangko Sentral ng Pilipinas aims to keep inflation within 2 to 4 percent.

Meanwhile, FMIC also does not expect surges in global oil prices.

“WTI prices have failed to sustain an earlier rise above $80 per barrel due to weak China growth and abundant non-OPEC supplies,” it said.