PRESS STATEMENT
ECONOMIC PERFORMANCE FOR Q4 AND FULL YEAR 2023
NEDA Secretary Arsenio M. Balisacan
January 31, 2024
Colleagues in government,Friends from the media,
Ladies and gentlemen,
Good morning.
Today, we are pleased to see that our economy has sustained its growth, expanding by 5.6 percent in the fourth quarter of 2023, resulting in a GDP growth rate of 5.6 percent for the entire year.
While this growth is below our target of 6 to 7 percent for 2023, it keeps us in the position of being one of the best-performing economies in Asia. Among those that have already released their Q4 2023 GDP growth figures, we follow Vietnam (6.7 percent) while surpassing China (5.2 percent) and Malaysia (3.4 percent).
More importantly, our full-year GDP for 2023 is now 8.6 percent higher than pre-pandemic levels. Moreover, the Q4 economic performance validates the strategies and policy directions outlined in the Philippine Development Plan 2023-2028.
Household spending, year-on-year, grew faster in Q4 (5.3 percent) versus the growth in Q3 (5.1 percent). We welcome the robust growth in spending for restaurants and hotels (16.2 percent), transport (12.2 percent), and recreation (7.3 percent), reflecting the improvements in the labor market and steady growth in remittances. However, we are concerned about the low growth in food spending due to high food prices, though inflation has moderated in recent months. Moving forward, we need to relentlessly manage elevated food prices, particularly improving the efficiency and resiliency of the agriculture value chain, utilizing strategic trade policy when domestic production is inadequate, and preventing anti-competitive practices in the marketplace.
The growth in total investments accelerated to 11.2 percent in Q4 2023, a turnaround from the 1.4 percent contraction in Q3. This resulted in a 5.4 percent growth for the full year. The robust investment expansion during the quarter was driven by significant growth in fixed capital (10.2 percent), particularly the expansion of durable equipment (14.6 percent). As I have mentioned in other fora, nothing less than massive, sustained investments is needed to achieve high-quality, job-creating growth and inclusion. Thus, a major effort will be made to address critical factors affecting investment decisions. We shall improve the ease of doing business through digitalization and continuous streamlining of policies and regulations, accelerate the execution of game-changing public infrastructure projects, facilitate more private-sector investments in energy and telecommunications, and upskill our workforce.
Meanwhile, construction sustained its double-digit growth of 10.1 percent in Q4 2023, owing to the upbeat private and public construction activities at 7.5 percent and 14.7 percent, respectively. This sector is expected to benefit significantly from the Build-Better-More program and this administration’s flagship housing program, the Pambansang Pabahay para sa Pilipino Housing program (4PH).
On the other hand, government spending contracted by 1.8 percent in Q4 2023 from 6.7 percent growth in Q3 2023. This brings the full-year growth in government spending to 0.4 percent, mainly due to the fiscal consolidation program. Recall that in 2022, the government spent a lot of resources on the vaccination program on top of the elections held in May.
The preceding notwithstanding, we will continue to implement the measures started in Q3 2023 to improve program implementation by the government. These measures include adopting the Integrated Financial Management Information Systems by all government instrumentalities, as directed by Executive Order 29, s. 2023.
The weak global economy weighed heavily on our export sector, which declined by 2.6 percent in Q4. The decline came mainly from the deep contraction in goods exports (11.6 percent), although services exports grew by 12.3 percent. Goods exports declined by 7.3 percent for the entire year, but services exports increased by 13.6 percent. We expect growth in services to maintain its trajectory as international tourism rebounds. We will present international tourists with a pleasant experience, beginning with improved airport services, simplified travel requirements, and, most significantly, a diverse range of tourism products.
Meanwhile, IT-BPM, a big part of services exports, will benefit from the improvements in our digital infrastructure. The goal is, moving forward, to adapt to the sector’s evolving needs by climbing the value chain and providing more complex IT-BPM services. We will expand the digital upskilling program to ensure that there will be a competitive pool of human resources for the sector.
Growth in the industry sector moderated to 3.2 percent in Q4 2023, bringing the sector’s full-year growth to 3.6 percent. The industry posted a meager 0.4 percent growth in Q4 2023 on a seasonally adjusted quarter-on-quarter basis. Moving forward, the implementation of the 4PH will fuel growth in the sector. We must encourage expansion in the sectors serving the construction industry: manufacturing, mining and quarrying, and EGW (electricity, gas, and water). We will expand skills training programs, both in scope and coverage, to ensure an adequate supply of construction and related workers.
The agriculture sector grew by 1.4 percent in Q4 2023, up from 0.9 percent in Q3 2023, which brings the full-year growth to 1.2 percent. Demand for agricultural output will remain vital – whether for household final consumption, industry inputs, or exports. We will need to improve the sector’s competitiveness using R&D, cutting-edge technology, upgraded post-production facilities, value-adding investments, and improved packaging and marketing, to name a few.
To ensure we have the fiscal resources to implement the abovementioned strategies, the government will streamline, digitalize, and enhance our tax administration systems by implementing the Ease of Paying Taxes Act. We will also optimize the use of resources by strengthening the linkages of planning, budgeting, and operational units within and among agencies. At the same time, we will work with legislators to enact new revenue-generating measures to build a solid fiscal foundation.
In his message last Sunday, President Ferdinand R. Marcos, Jr. called for the government to be swift and punctual in its delivery of services and implementation of projects as we work toward realizing a Bagong Pilipinas. We will heed the call and work with all our government colleagues to accelerate the implementation of the Philippine Development Plan to sustain the momentum and cement the gains we have made as a people and as a country.
Today, the NEDA will release the Philippine Development Report, or PDR 2023, to the public. The PDR identifies the critical programs, projects, and policies begun and implemented in the past year or 2023. As an evidence-based report, it evaluates our country’s performance concerning the outcome indicators identified in the PDP and includes updates on the Marcos Administration’s legislative agenda. As a forward-looking document, the PDR considers and anticipates internal and external developments and scenarios. Finally, it presents the lessons we have learned and lays down plans of action to ensure we remain on track to meet our goals by 2028. I urge the public to read the report to see how we have fared and how we see ourselves moving forward this year.
Thank you.