The Bank of the Philippine Islands (BPI) believes the economy in the fourth quarter of 2024 grew by 5.8 percent, citing increased government spending.
"Government expenditures provided a significant boost, with disbursements surging by 20 percent ahead of the elections this year," BPI chief economist Emilio Neri Jr. said Friday.
The actual fourth-quarter economic growth in terms of gross domestic product (GDP) will be released by the Philippine Statistics Authority on 30 January.
Economy in the third quarter last year grew by 5.2 percent, lower than economists' forecast of 5.7 to 6 percent based on DAILY TRIBUNE's survey.
The Department of Budget and Management reported government spending on infrastructure projects from January to October alone jumped by 13.2 percent to P1.09 trillion compared to P964.9 billion in the same period in 2023.
Officials expect the full-year infrastructure expense to reach P1.54 trillion or 5.8 percent of GDP.
Aside from government spending, Neri said the household consumption likely grew as lower rice prices provided them extra cash for discretionary spending.
National statistics show household consumption remained stable in the third quarter at 5.1 percent.
Neri said growth in remittances from overseas Filipino workers recorded at 3.5 percent in November likely encouraged their families back home to purchase more goods or services.
The economist added higher foreign direct investments through stocks and bonds supported economic growth.
The Bangko Sentral ng Pilipinas reported FDI net inflows surged by 50.2 percent to $1.0 billion in October from $681 million in the same month in 2023 amid easing inflation rates.
For this year, Neri expects the economy to grow further by 6.3 percent, reflecting higher household consumption due to lower interest rates.
He projects the Central Bank to cut its policy rate by 50 basis points to 5.25 percent this year, if overall inflation stabilizes near the lower end of its 2 to 4 percent target range.
"Inflation is likely to stay within the target of the BSP, assuming no unexpected supply shocks. While risks such as La Niña and global trade barriers could exert upward pressure on prices, these may be offset by stable commodity prices amid China’s economic slowdown, improving rice supply, and expanded US oil production," Neri said.