PH economy expands 7.6% in 2022

Filipinos have not let high inflation rate stop them from spending in 2022, as the Philippine Statistics Authority (PSA) reports that the country’s economic growth performed better than expected last year to a record growth in more than four decades due to revenge spending.

The economy, as measured by the country’s gross domestic product (GDP), expanded by 7.6 percent from January to December, hitting its highest level in more than four decades or since the 8.8 percent in 1978, the PSA reported Thursday, Jan. 26.

The full-year 2022 GDP also bested the inter-agency Development Budget Coordination Committee target of 6.5 percent to 7.5 percent. Moreover, it surpassed the 5.7 percent growth in 2021.

In addition, the economy grew faster than market expectations, which made the Philippines among the fastest growing economies in the world, according to the National Economic and Development Authority (NEDA).

“The Philippine economy’s growth remains robust as the government continues to intensify its efforts to restore the economy to its high-growth trajectory, creating more and better-quality jobs and speeding up poverty reduction,” NEDA Secretary Arsenio M. Balisacan said.

The higher than expected growth comes as Filipinos grappled with rising consumers prices, with inflation quickened to a 14-year high of 8.1 percent in December. The full-year averaged at 5.8 percent, breaching the government’s target of two percent to four percent.

In the fourth-quarter, the economy expanded by 7.2 percent, albeit slower than the maintained 7.6 percent GDP growth in the third quarter. It, however, exceeded the median analyst forecast of 6.8 percent.

“Among the major emerging economies in the region that have released their fourth-quarter 2022 real GDP growth, the Philippines grew the fastest, followed by Vietnam at 5.9 percent and China at 2.9 percent,” Balisacan said.

On a seasonally adjusted quarter-on-quarter basis, the Philippine economy expanded by 2.4 percent, driven by increased economic activity mainly from pent-up demand as the economy fully reopened in the last three months of 2022.

“Our robust performance in the fourth quarter reflected strong domestic demand, with three-fourths contributed by household consumption and almost a fifth by investment,” Balisacan said.

“The improvements in labor market conditions, increased tourism, ‘revenge’ and holiday spending, and resumption of face-to-face classes supported growth in the quarter, further reflecting a solid rebound in consumer and investor confidence in the economy,” he added.

The growth in domestic demand was met by expansion in the services and industry sectors, with production in most subsectors back to their pre-pandemic levels.

Services growth was mainly driven by wholesale and retail trade, while the expansion of manufacturing and construction subsectors supported industry growth.

In contrast, agricultural output slightly declined by 0.3 percent in the fourth quarter, which Balisacan said highlighted the need to strengthen the sector's productivity and resilience against natural disasters, animal diseases, and climate change.

“Nonetheless, economic growth came with more jobs. We saw vibrant labor market conditions, with the country’s unemployment rate down to 4.2 percent in November 2022 from 6.5 percent in the same period in 2021,” Balisacan said.

“This performance marks our lowest unemployment rate since 2005. We also observed an improvement in the quality of employment relative to the same period last year, as more workers found remunerative and stable work in private establishments and became employed in full-time jobs,” the NEDA chief added.

“With the resumption of face-to-face classes, the boost in the activities of small and large enterprises alike, and the resurgence of local tourism causing ripple effects towards the recovery of all the other sectors affected by the pandemic, we are confident that we will remain on our high-growth trajectory,” he concluded.

The Philippine Chamber of Commerce and Industry (PCCI) said the country’s impressive economic performance in 2022 will be a good foundation for continued growth this year.

“The entire year looks promising, the 2022 GDP rate is giving the economy a strong rebound,” said PCCI President George T. Barcelon, who attributed the 7.6 percent GDP growth last year to the reopening of the economy, particularly the face-to-face classes that fuel mobility and consumption, and the infrastructure projects that led to more economic activities.

For this year, Barcelon said growth may not be as rosy as 2022 because of the expected global economic recession. But he expressed confidence that growth this year will still hover near the seven percent level.

“I am confident it may not be 7.5 percent but hovering near seven percent because of consumption and reopening,” he said.

Growth this year, he said, will still be driven by the continued infrastructure projects. He said the pronouncement of President Ferdinand R. Marcos Jr. to build houses for the homeless would be a big boost in the construction industry, which has very wide industry linkage.

The continued low Covid infection rate should also encourage further rebuilding and more manufacturing operations, he said.

“Let us avoid any shortages in food items to avoid higher prices,” he warned as he pushed for improvement on the logistics side to reduce cost of transport and mobility from production hubs to the market.

The Makati Business Club (MBC) cited the domestic economy’s performance last year despite being hit by inflationary effects and supply chain disruptions for oil and other key food commodities.

“The country’s economy significantly rebounded due to the easing of pandemic restrictions resulting in increased consumer spending and growth in tourism with positive impacts on jobs,” MBC said in a statement.

MBC, however, noted of a challenging prospects for the global economy. The International Monetary Fund noted that “this year may feel like a recession.” (Bernie Cahiles-Magkilat)