Analysts warn of a global slowdown and high inflation point to a tough year ahead for the Southeast Asian economy.
The Philippine economy ended 2022 with the fastest growth in more than 40 years buoyed by a strong final quarter, but analysts and policymakers warn that a global slowdown and high inflation will make for a difficult year ahead.
Manila In the fourth quarter, it topped the 7.2 percent annual growth reported by the statistics agency, compared with the 6.5 percent pace expected in a Reuters poll, bringing the expansion for the full year to 7.6 percent, the fastest since 1976 and above the target. Government of 6.5 to. 7.5 percent.
Economic Planning Minister Arsenio Palizcan attributed the stellar performance in the fourth quarter to strong domestic demand, an increase in jobs, and “retaliatory” spending after the lifting of pandemic restrictions and a full reopening in the last three months of the year.
“We are confident that we will remain on the high growth trajectory,” Baliskan said at a media briefing on Thursday.
He said the reopening of China would be a boon for the Philippine economy while protecting the purchasing power of Filipinos and ensuring food security would remain a priority for the government as the public grapples with soaring inflation.
On a quarterly basis, GDP growth was 2.4 percent in the October-December period, compared to expectations for a 1.5 percent increase and the previous quarter’s upwardly revised expansion of 3.3 percent.
Balizkan said the government is committed to its 6 to 7 percent growth target for 2023, but this is not without risks, as the global economy is expected to slow further this year, due to the conflict in Ukraine, while rising inflation could lead to further tightening. Politics. .
Like the rest of the world, the Philippines is battling severe inflation, currently at a 14-year high, which if not tamed could hamper domestic consumption, a key driver of growth.
Government data showed household spending slowed for the third consecutive quarter from October to December, growing at an annual rate of 7 percent from 8 percent in the third quarter.
“We expect a difficult year for the Philippines,” Capital Economics said in a note, citing the impact of higher inflation and tighter monetary policy on domestic spending. For 2023, Capital Economics expects growth of 5.5%.
High inflation, combined with the need to maintain interest rate differentials between the US and the Philippines, prompted Bangko Sentral ng Pilipinas (BSP) to embark on an aggressive tightening cycle last year.
Its governor signaled further tightening in the first quarter to bring inflation, which hit 8.1 percent in December, back to its target of 2-4 percent this year.