Continued normalization of PH economy expected

An economist on Thursday said the domestic economic growth of 6.4 percent in the first quarter of 2023 surpassed expectations and is in line with normalizing base effects.

omy’s growth drivers, noting that majority of the country’s more than 110 million population is “already at working age since 2015.” obstacle to economic growth in the past three years was the Covid-19 pandemic, which now “seems to be behind us.”

In light of the job market’s gradual recovery, Ortiz-Luis called on the administration to put aside proposals for legislated wage increases and instead, leave wage-setting to the various Regional Tripartite Wage and Productivity Boards.

Meanwhile, Roberto Galang, dean at Ateneo de Manila’s John Gokongwei School of Manage-

In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said base effects played a big part in the slower growth, as measured by gross domestic product (GDP), in the first three months this year “as there have been no more large lockdowns since 2022; compared to some pocket of lockdowns in 2021 that created a lower base/denominator for 2022,”

The GDP expanded by 7.1 percent in the fourth quarter of 2022.

“Thus, as a result of normalizing base/denominator effects (also after the one-time election-related spending for 2022), Philippine GDP growth for the coming quarters could normalize further to around 5.5-6.5 percent for 2Q-4Q (second quarter to fourth quarter) 2023 and for full year 2023 and beyond,” he said.

Ricafort said favorable demographics remain among the econ-

“Before the pandemic, Philippine economic/GDP consistently grew by at least 6 percent from 2012-2019 due to the demographic sweet spot/dividend,” he said.

Ricafort said one of the biggest growth drivers of the domestic economy in the first quarter this year is the lower individual income tax rates, which is part of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

He said the lower tax rates for most income brackets starting in January this year increased workers’ take home pay by around 3 to 5 percent.

“This could lead to increased consumer spending, which accounts for at least 75 percent of the economy, and, in turn, lead to faster economic/GDP growth; to also help ease the adverse effects of higher prices/inflation recently,” he added.

Ricafort said the expected