Despite turbulent external aspects that caused Filipinos to experience high inflation, the Philippine economy ended 2022 on a powerful note, but there are growing indications that growth can have peaked and is predicted to have a weaker trajectory this yr.
The Philippine Statistics Authority announced that gross domestic product, or the full value of all services and products produced within the country, grew by 7.6% annually in 2022, outpacing the 5.7% growth recorded within the previous yr.
The latest statistics beat analyst forecasts, predicting growth of seven.5% last yr. It also exceeded the Marcos administration’s 5.8% GDP growth goal for 2022.
The fourth quarter of 2022 was favorable for, amongst others, increase in consumer spending throughout the holiday season. In the last three months of 2012, GDP grew by 7.2% annually, but at a slower pace than the 7.6% growth achieved within the previous quarter.
Two years have passed because the epidemic caused the national economy to collapse to levels not seen since World War II. Consumer spending contributed well to the Philippine economy within the third quarter, which saw moderate growth.
All in all, the past yr was bittersweet for Filipinos. At the start of the second quarter, the national government lifted epidemic restrictions in the course of a divisive election yr wherein the late dictator’s son was elected president.
During the primary few months of President Ferdinand Marcos Jr.’s rule. consumer spending has skyrocketed. But supply chain problems, high gasoline prices and a weak peso have marred the Philippines’ reopening story. Inflation is widely expected to peak in December 2022 as rising consumer prices have weakened the general public’s purchasing power.
Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said retaliatory spending fueled the economy within the fourth quarter.
“Revenge spending helped stimulate overall economic activity last year, but at the cost of falling family savings and rising household debt,” he said in a Viber message sent before the statistics were released.
The ING analyst predicted that GDP will increase by 7.7% in 2022, with the rise expected to be 7.5% annually within the fourth quarter of 2022.
Separately, Domini Velasquez, senior economist at China Banking Corp., attributed the 2022 recovery to third-quarter GDP, which unexpectedly rose as inflation didn’t curb consumer spending.
In a message, Viber said “economy reopening momentum, pent-up demand after two years of lockdowns, and election spending contributed to growth in 2022.”
Velasquez noted that agriculture lagged as production remained within the red for many of 2022 as a consequence of fierce typhoons and high fertilizer costs.
Therefore, this yr could also be one other difficult yr for the Philippine economy. The expected global economic downturn may make it harder for the country’s important trading partners to realize profits. A similarly bleak picture may prompt international investors to reconsider allocating their funds to the country.
Mapa ING agreed with this ruling. “2023 will be more difficult due to the triple threat and the possibility of a global recession,” he said. Velasquez identified 2023 because the yr when demand dynamics may weaken. The BSP’s rate of interest increases aimed toward fighting inflation have already began to trickle right down to the economy.
“High interest rates will also hamper business growth. However, China’s recent reopening will be a tailwind this year, providing much-needed help in fighting recessions in developed countries,” she noted.
source: Filstar
