J. Albert Gamboa l January 10, 2024 l Business Mirror
FORTUNE tellers and economists come up with their forecasts at the beginning of each year to give a glimpse of what’s in store for individuals, nations and markets in the next 12 months. Based on the Oriental horoscope, most of the predictions revealed that the “Year of the Dragon”–particularly 2024, the Wooden Dragon year–will bring prosperity, authority and favorable outcomes.
In its 2024 Philippine Economic Outlook, the European Chamber of Commerce of the Philippines (ECCP) cited the World Bank’s forecast that the country’s gross domestic product (GDP) is estimated to grow by 5.8 percent this year. The ECCP hosted the forum last month to provide guidance to the business community on how to calibrate strategies and plans amidst tighter financial conditions and adverse external pressures.
The International Monetary Fund (IMF) is optimistic that the Philippines’s GDP will reach 6.0 percent in 2024 with fiscal policy-making, environmental factors and geopolitics playing a major role in deciding the country’s economic direction. In its latest report released last December 15, the IMF Executive Board predicted that accelerated public investment and improved external demand for Philippine exports will fuel the robust growth.
According to the IMF report, “the government’s infrastructure program, opening up of sectors to greater foreign investment and private sector participation through PPP modalities will gradually crowd in private investment and help realize a growth potential of about 6.0 percent to 6.5 percent over the medium term.”
Two economists belonging to the academe agreed with the IMF’s forecast. Dean Roberto Martin N. Galang of the Ateneo de Manila University’s John Gokongwei School of Management believes that the manner in which the government navigates geopolitical issues, such as the territorial dispute in the West Philippine Sea, shall have a huge bearing on the attainment of economic growth targets.
University of Santo Tomas’s Economics Department Chair Carlos L. Manapat said the Philippines is likely to remain a net importer in the short term and aggressively pushing the export sector forward will positively affect the country’s economic numbers. “If the IMF’s expectations come true, then its growth forecast for the Philippines is attainable,” Manapat shared during a media interview.
International credit rating agencies have also expressed confidence in the country’s macroeconomic fundamentals. This is evidenced by our continued investor-grade credit ratings while many other economies experienced downgrades in 2023.
Fitch Ratings foresees that our medium-term growth “will be considerably stronger than the median of similarly-rated peers,” while Moody’s deemed that the country will have a “rapid economic growth relative to peers, complemented by the stabilization and eventual reversal of the deterioration in fiscal and debt metrics.” S&P’s stable outlook reflects its “expectations that the Philippine economy will maintain healthy growth rates and the fiscal performance will materially improve over the next 24 months.”
A study of top Wall Street firms’ outlooks for 2024 conducted by an Australian think tank showed three recurring investment themes. There is a general agreement that central banks worldwide, notably the US Federal Reserve, have managed to engineer a “soft landing” scenario where interest rates were raised just enough to tame inflation and avoid a recession.
Another consensus was that geopolitical factors would play a bigger-than-usual role this year. Major issues include the wars in Ukraine and Gaza as well as hostile relations between China and Taiwan. Also to be considered are the following markets that surveyed strategists found most promising: India, Japan and Mexico.
Among the firms in the survey were JP Morgan, Blackrock, Morgan Stanley, Lazard, Merrill Lynch and Goldman Sachs. On the whole, their research teams are cautiously optimistic about 2024 but believe that returns are likely to be more modest than 2023 with pockets of outperformance in certain sectors.
*** Joseph Gamboa is the vice-chair of the Finex Ethics Committee and director of Noble Asia Industrial Corp. The views expressed herein do not necessarily reflect the opinion of these institutions and the BusinessMirror. #FinexPhils www.finex.org.ph.