Analysts have warned that a slowing global economy and soaring inflation point to a difficult year for Southeast Asian economies.
The Philippine economy ended 2022 with its fastest growth in more than 40 years, aided by a strong final quarter, but analysts and policymakers said a global slowdown and soaring inflation could put the economy at risk. He warns that the year ahead will be difficult.
Expected annual growth in Manila in the fourth quarter was 7.2% reported by the Bureau of Statistics, compared to 6.5% forecast in a Reuters poll, bringing the full year growth to 7.6%. 7.5 percent.
Economic Planning Secretary Arsenio Barisacan said the strong fourth quarter performance was driven by strong domestic demand, job gains and ‘revenge’ spending following the lifting of pandemic controls and full reopening in the last three months of the year. I think it is.
“We are confident it will stay on a high-growth trajectory,” Variskan said at a media briefing on Thursday.
He said China’s reopening will benefit the Philippine economy while protecting the purchasing power of Filipinos and ensuring food security remains a priority for the government as the population grapples with high inflation. .
On a quarterly basis, GDP growth was 2.4% from October to December. That compares with a 1.5% rise and his revised upward forecast of 3.3% expansion last quarter.
Barisakan said the government is sticking to its 6-7% growth target for 2023, but this is not without risks, with the global economy set to be disrupted and further slowed this year by the conflict in Ukraine. He said higher inflation could lead to further policy tightening. .
Like the rest of the world, the Philippines is battling rampant inflation, now at its highest level in 14 years, which, if left unchecked, could weigh on domestic consumption, a key driver of growth. .
Household spending slowed for the third consecutive quarter from October to December, increasing at an annualized rate of 7% from 8% in the third quarter, according to government data.
“We expect a difficult year for the Philippines,” Capital Economics said in a report, citing the impact of high inflation and tight monetary policy on domestic spending. Capital Economics forecasts 5.5% growth in 2023.
The need to maintain interest rate differentials between the US and the Philippines, combined with rising inflation, forced the central bank (BSP) to embark on an aggressive tightening cycle last year.
The governor has hinted at further tightening in the first quarter to return inflation, which reached 8.1% in December, to this year’s target of 2-4%.