MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla is optimistic of an above 6 percent growth for the domestic economy this 2023 amidst projected slower global output.
During the Tuesday Club event in Mandaluyong City, Medalla said pent up demand in the tourism sector and car sales, among others, remain high and continue to be served as the economy is reopened further.
“The economy is strong and the pent-up demand will continue driving the economy this year,” he said.
The government’s growth assumption for this year has been slashed from 6.5 to 8 percent to between 6 to 7 percent primarily due to the expected slower growth in advanced economies.
Economic growth, as measured by gross domestic product (GDP), in the first three quarters of 2022 averaged at 7.7 percent, exceeding the 6.5 to 7.5 assumption of economic managers.
Medalla said the 350 basis points uptick in the central bank’s key rates last year is not expected to immediately hit domestic demand since people continue to spend following the lockdowns when the pandemic hit in 2020.
He said demographic dividend is a plus for the economy because of a large number of the population that can be part of the labor sector, which helps economic activities flourish.
Continued gains of the business process outsourcing (BPO) sector is also expected to bolster domestic growth, he added.
The BPO sector, which benefits from the availability of young and English-proficient Filipinos, is among the factors that prop up the economy.
Since it started around two decades ago, the sector placed the country as among the top 2 leading contact center outsourcing destination in the world, employing over 1.3 million workers and contributing around 9 percent in the economy’s annual output.
Medalla said the increased infrastructure spending of both the private and the public sectors are expected to further lift the economy given the long-term effect of having adequate infrastructure.
The Marcos administration intends to keep expenditures on infrastructure to account to around 5 percent of GDP, sustaining its rise from the previous administration. (PNA)