2022 GDP growth seen to have surged past 7%

The Philippine economy’s prospects as being among the best performers in Asia last year is on firm ground if only based on most forecasts putting the full-year 2022 readout above 7 percent.

The government’s own goal is for growth to print at 6.5 percent to 7.5 percent—aiming at 7 percent with a 0.5-percentage-point leeway upward and downward.

The Philippine Statistics Authority (PSA) is announcing on Thursday morning the national accounts data for the fourth quarter and full-year 2022.

“Will the numbers disappoint, or will they show resilience despite external headwinds and inflation challenges?” Socioeconomic planning Secretary Arsenio Balisacan teased in a social media post.

Most analysts, including those with multilateral lenders, credit watchers and financial services groups, put the full-year print at the upper band of the government’s target range.

The most optimistic is Rizal Commercial Banking Corp., whose chief economist Michael Ricafort predicted 2022 growth to reach the range of 7.6 percent to 7.8 percent.

Also, the Netherlands-based ING Bank and homegrown Bank of the Philippine Islands have a similar, but narrower forecast at 7.7 percent.

The latest forecasts show that S&P Global Ratings expects 7.1 percent; the World Bank, 7.2 percent; Asean+3 Macroeconomic Research Office (Amro) as well as Moody’s Investors Service , 7.3 percent; and Asian Development Bank (ADB) 7.4 percent.

These were revised from earlier forecasts that were at the lower band of the government’s target range—6.3 percent by S&P, 6.5 percent by ADB and World Bank, 6.7 percent by Moody’s and 6.9 percent by Amro.

Most conservative

Meanwhile, the most conservative forecasts are from Fitch Ratings at 6.8 percent and the International Monetary Fund (IMF) at 6.5 percent.

Last September, a visiting team from the IMF announced that its forecasts for the Philippines were lowered from a previous forecast of 6.7 percent.

The IMF team said that while the economy remained fundamentally sound, the government was facing the challenges of calibrating the policy mix to put the recovery on a firmer footing; building fiscal buffers as insurance against significant downside risks; raising long-term growth and the standard of living for all Filipinos.

Meanwhile, Ricafort said the Philippine economy has already returned to prepandemic levels in peso terms at constant 2018 prices, “after two lost years due to the COVID-19 pandemic.”

“But offsetting challenges remain such as higher inflation which hit 8.1 percent in December 2022, reaching new 14-year highs largely triggered by Russia’s invasion of Ukraine that led to higher global commodity prices especially earlier in 2022,” Ricafort said.

He also noted challenges such as the Bangko Sentral ng Pilipinas’ policy rate having reached a 14-month high of 5.5 percent as well as a debt-to-gross domestic product ratio of 63.7 percent which was above the international threshold of 60 percent that is considered as prudent.

Meanwhile, the PSA affirmed that the Philippine economy grew at a faster-than-expected rate of 7.6 percent in the third quarter of 2022.

In previous quarters, the PSA reported revised figures that showed upward and downward changes from preliminary numbers.

Earlier last year, after customary reviews that are based on international standard practices, the PSA revised downward the first-quarter growth rate to 8.2 percent from the preliminary 8.3 percent.

Also, the agency revised upward the second-quarter readout to 7.5 percent from 7.4 percent.

Business groups

Business groups are also optimistic the Philippine economy grew at a faster pace in 2022, with most agreeing that the economic expansion reached at least 7 percent.

“[The full year figure] should be higher than 7 percent because of the Christmas season when there is more economic activity,” Philippine Chamber of Commerce and Industry (PCCI) president George Barcelon told the Inquirer in a phone interview.

“And then the president has also relaxed all these protocols. So, I think that would definitely push up the gross domestic product [growth],” he added.

American Chamber of Commerce of the Philippines (AmCham Philippines) executive director Ebb Hinchcliffe, meanwhile, said they were projecting a 7 percent GDP growth last year.

“I believe a slight growth will be seen. Lots of optimism out there as we move into the next normal,” he said in a message to the Inquirer.

The AmCham official added that the Christmas season, as well the preparations by the private sector for 2023 would have been the top two contributing factors to this economic growth.

In another interview, British Chamber of Commerce Philippines (BCCP) executive director Chris Nelson said that there is a “good opportunity” that the 7.5 percent GDP growth was reached in 2022.

“The policies of the administration have been very consistent,” he said, citing that this would have helped in reaching the government’s target.

However, when sought for comment, Financial Executives Institute of the Philippines (Finex) president Wilson Tan told the Inquirer that the fourth quarter GDP performance likely expanded, albeit at a slower pace compared to the previous three months.

“I think it grew but maybe to a lesser degree than (the third quarter),” Tan said in another message, but did not elaborate further.

–With a report from Alden M. Monzon

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