Gov’t missed 2024 GDP growth target
The Marcos administration missed its growth target for the second straight year in 2024, falling below consensus after the onslaught of destructive typhoons had muted the typical surge in economic activities during the holiday season.
Gross domestic product (GDP), the sum of all products and services created within an economy, expanded at an average rate of 5.6 percent for the entire 2024, the Philippine Statistics Authority (PSA) reported on Thursday.
While that pace of expansion was a little faster than the 5.5-percent growth in 2023, the latest reading fell short of the revised 6-to-6.5-percent goal of the Marcos administration, marking the second year of below-target GDP growth.
At the same time, last year’s performance failed to meet market expectations after settling below the median estimate of 5.8 percent in an Inquirer poll of 12 economists.
Data showed the economy was not able to muster enough power at the last minute to hit at least the low end of the official target range.
The statistics agency reported that GDP had expanded by 5.2 percent in the fourth quarter, unchanged from the preceding three months and lower than the year-ago print of 5.5 percent. That was also below the median forecast of 5.8 percent.
At a press conference, National Economic and Development Authority Undersecretary Rosemarie Edillon said the “new normal” had brought challenges that required a recalibration of growth strategy.
“In 2024, we faced numerous setbacks like extreme weather events, geopolitical tensions and subdued global demand, similar to the challenges we encountered in 2023. This suggests that these conditions may represent the new normal,” Edillon said.
“Therefore, beyond aiming for higher numbers, our focus is on building resilience,” she added.
Softer consumer spending
Dissecting the PSA’s report, consumer spending, which historically accounts for about 70 percent of GDP, slowed to 4.7 percent in the three months through December from 5.2 percent in the third quarter. This was despite the usual uptick in demand ahead of the holiday season.
Edillon said the powerful storms that had battered the country in the second half weighed on consumption growth, with the 1.8-percent contraction in farm output stoking food price inflation that likely hit Filipinos’ spending power.
But government spending was a bright spot, growing at a quicker clip of 9.7 percent in the final quarter of 2024, from 5 percent before.
Moving forward, Miguel Chanco, economist at Pantheon Macroeconomics, believed that consumer spending would likely stay under pressure from “still weak” household balance sheets, as well as low savings and high debt.
Gareth Leather, senior Asia economist at Capital Economics, expected the interest rate cuts of the Bangko Sentral ng Pilipinas to support growth this year.
“Strong and steady growth supports our view that the easing cycle will remain gradual over the coming months,” Leather said.
