Philippine economic system grows at quickest tempo in 40 years | Enterprise and Economic system


Analysts warn international slowdown and hovering inflation level to a troublesome yr forward for the Southeast Asian economic system.

The Philippine economic system has ended 2022 with the quickest progress in additional than 40 years underpinned by a strong closing quarter, however analysts and policymakers warn {that a} international slowdown and hovering inflation will make for a troublesome yr forward.

Manila’s fourth quarter forecast-beating annual progress of seven.2 p.c reported by the statistics company, in contrast with the 6.5 p.c tempo anticipated in a Reuters ballot, introduced full-year growth to 7.6 p.c, the quickest since 1976 and above the federal government’s goal of 6.5 to 7.5 p.c.

Financial Planning Secretary Arsenio Balisacan attributed the stellar fourth-quarter efficiency to robust home demand, an increase in jobs, and “revenge” spending following the lifting of pandemic curbs and full reopening within the final three months of the yr.

“We’re assured that we’ll stay in our excessive progress trajectory,” Baliscan instructed a media briefing on Thursday.

He mentioned China’s reopening shall be a boon for the Philippine economic system whereas defending the buying energy of Filipinos and making certain meals safety would stay priorities for the federal government as the general public grapples with excessive inflation.

On a quarter-on-quarter foundation, GDP progress got here in at 2.Four p.c in October-December, in contrast with expectations for a 1.5 p.c rise and the earlier quarter’s upwardly revised 3.Three p.c growth.

Balisacan mentioned the federal government was sticking with its 6 to 7 p.c progress goal for 2023, however that isn’t with out dangers, with the worldwide economic system anticipated to sluggish additional this yr, roiled by the Ukraine battle, whereas rising inflation might result in additional coverage tightening.

Like the remainder of the world, the Philippines is battling red-hot inflation, at present operating at 14-year highs, which if not tamed might crimp home consumption, a serious driver of progress.

Authorities information confirmed family spending slowed for a 3rd straight quarter within the October-December interval, rising at an annual price of seven p.c from Eight p.c within the third quarter.

“We count on a troublesome yr forward for the Philippines,” Capital Economics mentioned in a be aware, citing the impression of excessive inflation and tighter financial coverage on home spending. For 2023, Capital Economics is anticipating progress of 5.5 p.c.

Elevated inflation, plus the necessity to keep rate of interest differentials between the US and the Philippines, have pressured the Bangko Sentral ng Pilipinas (BSP) to embark on an aggressive tightening cycle final yr.

Its governor has signalled additional tightening within the first quarter to deliver inflation, which hit 8.1 p.c in December, again to its 2-Four p.c goal this yr.

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