Despite turbulent external headwinds that caused Filipinos to endure high inflation, the Philippine economy concluded 2022 on a high note, however, there are rising indications that growth has likely reached its top and a weaker trajectory is expected this year.
The Philippine Statistics Authority announced that the gross domestic product, the total value of all products and services produced in the nation, grew 7.6% annually in 2022, outpacing the 5.7% increase recorded the previous year.
The most recent statistic surpassed analysts' forecasts for a 7.5% increase last year. It also exceeded the Marcos administration's GDP growth objective of 5.8% for 2022.
The fourth quarter of 2022 was supported by a surge in consumer spending over the holiday season, among other factors. In the final three months of 2012, the GDP increased by 7.2% annually, but at a slower rate than the 7.6% growth achieved in the previous quarter.
Two years have passed since the epidemic caused the domestic economy to plummet to levels not seen since World War II. Consumer spending was a bright light for the Philippine economy in the third quarter, which saw modest increase.
As it stands, the previous year was bittersweet for Filipinos. In the early stages of the second quarter, the national government lifted epidemic restrictions in the midst of a divisive election year that saw the late dictator's son elected president.
During the first several months of President Ferdinand Marcos Jr.'s administration, consumer spending surged. However, problems in the supply chain, high gasoline prices, and a weak peso ruined the Philippines' reopening story. It is commonly anticipated that inflation will have peaked in December 2022, since growing consumer prices have eroded the purchasing power of the populace.
Nicholas Antonio Mapa, the senior economist at ING Bank in Manila, stated that in the fourth quarter, retaliatory spending kept the economy humming.
"Revenge spending helped boost overall economic activity last year, but at the price of a decline in family savings and a rise in household debt," he stated in a Viber message sent prior to the release of the statistics.
The ING analyst predicted that the GDP will increase by 7.7% in 2022, with growth in the fourth quarter of 2022 anticipated to reach 7.5% annually.
Separately, Domini Velasquez, senior economist at China Banking Corp., attributed the upturn in 2022 to the third-quarter GDP number, which unexpectedly increased as inflation failed to curb consumer spending.
She stated in a Viber message that "economic reopening momentum, pent-up demand after two years of lockdowns, and election expenditure contributed to 2022's increase."
Velasquez observed that agriculture was the single laggard since production remained in the red for most of 2022 due to a rash of typhoons and high fertilizer costs.
Consequently, this year might be another difficult one for the Philippine economy. A predicted worldwide economic downturn might impede profits from the nation's main trading partners. Similarly, the bleak picture may cause international investors to reconsider placing their funds in the country.
Mapa of ING concurred with this judgment. "2023 will be more difficult due to the triple threat and the possibility of a worldwide recession," he stated. Velasquez described 2023 as a year in which demand momentum may weaken. Already, the BSP's interest rate increases to combat inflation have begun to permeate the economy.
"High interest rates will also hinder the development of businesses. However, the recent re-opening of China will be a tailwind for this year, delivering a much-needed lift against recessions in developed countries," she noted.
Source: Philstar
