THE Philippine economy is projected to grow by over 6 percent this year, driven by the continued growth in consumer spending and the services sector, an economist said.
During the virtual post-State of the Nation Address briefing on Friday, University of Asia and the Pacific economist Victor Abola said the economy will likely grow by 6.1 percent this year.
Abola’s forecast settles within the government’s 6- to 7-percent economic growth target for this year.
He said domestic demand will continue boosting the growth of the economy.
Abola added that despite the increase in commodity prices, consumer spending will likely continue to grow amid high employment and the cut in personal income tax.
Majority of taxpayers received further personal income tax cuts starting January 1 this year pursuant to Republic Act 10963, or the “Tax Reform for Acceleration and Inclusion Law,” which, among others, adjusted personal income tax rates to make the tax system simpler, fairer and more efficient.
Abola said the projected growth this year is also “based on the strong performance of the services sector, particularly accommodation and food services,” driven by the further easing of mobility restrictions.
“Industry sector will be buoyed up by construction, and so far I’ve seen also manufacturing mostly positive gains in the second quarter, which will accelerate in the second half,” he said.
Inflation, on the other hand, is projected to continue to ease in the coming months after decelerating to 5.4 percent as of end-June.
“Inflation is going down within the BSP (Bangko Sentral ng Pilipinas) targets by the fourth quarter and could probably even go below 3 percent year on year,” he said.
Meanwhile, Abola said the dollar-peso exchange rate will likely range to 56 to 58 this year.