ECONOMIC GROWTH will likely miss the government’s targets this year, according to a policy think tank attached to the House of Representatives.

In a policy brief, the Congressional Policy and Budget Research Department (CPBRD) said gross domestic product (GDP) is likely to expand 5.5% in 2023, missing the 6-7% government target.

The economy expanded by a weaker-than-expected 4.3% in the second quarter, down from the 6.4% reading in the first quarter and the 7.5% posted in the second quarter last year.

This brought GDP growth to 5.3% in the first half.

“While slightly more conservative compared to the multilateral institutions, this outlook still signifies a positive trajectory for the Philippine economy in the upcoming years,” the CPBRD said.

It also expects economic growth to slow to 3.6-4.6% in 2024. This is also below the government’s 6.5-8% target band for next year.

The think tank expects inflation to average 5.3% this year, easing to 3.1-5.1% next year.

Headline inflation accelerated to 5.3% in August from 4.7% in July. This was also above the 4.9% median estimate in a BusinessWorld poll conducted last week.

August also marked the 17th consecutive month that inflation surpassed the central bank’s 2-4% target range.

In the first eight months, inflation averaged 6.6%, still above the central bank’s 5.6% full-year forecast.

“Inflation is on a downward trend in most developing countries due to the stabilization of commodity prices brought about by improved global supply conditions,” it said.

However, the CPBRD cited other risks to the inflation outlook, such as elevated oil and coal prices.

“Global crude oil prices are expected to remain within the $70 to $80 range even with anticipated OPEC supply cuts throughout 2024. The initial supply side impact of the Russian-Ukraine conflict on the global oil market appears to have dissipated given global supply-demand side adjustments,” it said.

The CPBRD noted that the level of exposure of the Philippines to movements in oil prices is a “relevant risk factor to keep in mind especially given the growth in domestic energy demand.”

Global coal prices are also expected to remain above pre-pandemic levels, it said.

“Policymakers, however, need to remain mindful of risks including the growing demand in China and other countries in the region for Indonesian coal as well as export adjustments on the part of Indonesia. These risks are magnified by the dependence of the Philippine energy grid on coal power,” it added. — Luisa Maria Jacinta C. Jocson