CONSUMPTION will once again be the primary driver of economic expansion in 2024 as the threat from inflation recedes, Finance Secretary Benjamin E. Diokno said.

The Development Budget Coordination Committee (DBCC) expects gross domestic product (GDP) to grow by 6.5%-7.5% next year, “taking into account the risks posed by the possible global economic slowdown, El Niño, and other natural disasters, as well as geopolitical and trade tensions,” Mr. Diokno said in a statement Thursday.

The DBCC expects the economy to grow by 6-7% this year, and by 6.5-8% for 2025-2028.

GDP grew 5.9% in the third quarter, bringing the nine-month average to 5.5%.

“Growth in 2024 will be driven by private consumption as inflation is expected to return within the target range,” the Department of Finance (DoF) said.

The BSP last week maintained its 2-4% inflation target range through 2026, but said risks were weighted to the upside.

Its forecasts indicate inflation will likely decelerate next year and in 2025, “given limited demand-based inflation pressures amid improving supply conditions.”

Headline inflation slowed to 4.1% in November from 4.9% in October, marking the 20th straight month of price growth breaching the BSP’s 2-4% target. Year to date, inflation averaged 6.2%.

Growth in 2024 will also be led by investment due to the Philippines’ “sound macroeconomic fundamentals, investment-grade credit ratings, the implementation of structural reforms; and increased demand for Philippine exports as supply chain bottlenecks ease.”

On the supply side, growth will be driven by the services and industry sectors, the DoF said.

The government’s 2028 medium-term fiscal framework, which includes a deficit target of 5.1% of GDP, could also be achieved with the passage of proposed legislation to fund the P5.77-trillion budget for 2024.

“The economic team will continue to work with Congress in pushing for key reforms crucial to accelerating economic development,” Mr. Diokno said.

This year, the government’s deficit ceiling is set at P1.49 trillion, equivalent to 6.1% of GDP. The projection assumes P3.847 trillion in revenue and P5.34 trillion in disbursements.

The Bureau of the Treasury reported that the National Government budget deficit narrowed by 24.8% to P93.3 billion last month from the P123.9-billion deficit in November 2022.

In the year to date, the fiscal deficit contracted by 10.1% year on year to P1.11 trillion. This was equivalent to 74.1% of the full-year P1.499-trillion targeted deficit. — Aaron Michael C. Sy