PH 2022 GDP Fastest Growth in 40 Years, 2023 Poses Challenges for Economy

The Philippine economy ended 2022 with an impressive 7.6 percent growth, the fastest since 1976, according to the Philippine Statistics Authority (PSA).

The fourth quarter saw a 7.2 percent growth, beating expectations and driven by strong domestic demand, job growth, and “revenge” spending following the lifting of pandemic restrictions.

Economic Planning Secretary Arsenio Balisacan said that the government is confident in the country’s high growth trajectory, but warned that a global slowdown and rising inflation could make for a difficult year ahead.

The reopening of the borders of China presents an opportunity for the Philippine economy and is expected to be a boon for the Philippine economy, however, Balisacan added that the top priority for the government will be the protection of the Filipino purchasing power and food security amid soaring prices of commodities that were experienced last year.

The government remains steadfast with its 6.0 to 7.0 percent 2023 growth target, however, the global economy is expected to continue slowing down this year due to the Russian invasion of Ukraine coupled with rising inflation.

Government data shows that household spending slowed for a third straight quarter in the October-December period, growing at an annual rate of 7.0 percent from 8.0 percent in the third quarter.

Elevated inflation along with the importance of maintaining interest rate differentials between the U.S. and the Philippines pushed the Bangko Sentral ng Pilipinas (BSP) to implement aggressive policies last year.

Moreover, BSP governor Felipe Medalla signaled further policy actions that will heavily depend on the actions of the U.S. Federal Reserve.

Medalla added during an economic briefing in London that BSP stands ready to act to bring down inflation to the 2 to 4 percent target of the government this year. (GFB)