GDP growth forecast: 6.9%

‘Agriculture was likely the laggard (in the economic growth) given higher input costs and the impact of typhoons in September and October’

Photo by Analy Labor

The growth of the country’s gross domestic product is still expected to expand in 2022 on the back of strong fourth-quarter gains due to a strong manufacturing sector and record low unemployment, several private sector economists said over the weekend.

In a Viber message, China Bank chief economist Domini Velasquez said the country’s GDP in the fourth quarter of 2022 likely grew by 6.9 percent due to a broad-based recovery in almost all sectors.

She said the industry sector, specifically manufacturing, remained resilient despite high input costs. While there were reports of weakening external demand, Velasquez said sales to the domestic market more than made up for this.

Moreover, Velasquez said the country’s exports continued to thrive and defied the global trend as semiconductor sales increased. Full face-to-face holidays supported the sector on the services side, she said.

“Agriculture was likely the laggard (in the economic growth) given higher input costs and the impact of typhoons in September and October,” she said.

“On the demand side, we expect household consumption growth to remain moderately positive despite higher inflation,” she added.

Imports of consumer goods, she said, were still up, although on a downtrend already. On the other hand, construction—both private and public, likely softened.

She added that the fourth-quarter performance brought the full-year growth rate to 7.5 percent, which is at the upper end of the national government’s target range.

“Momentum from economic re-opening, pent-up demand after 2 years of lockdowns, and election spending contributed to 2022’s growth,” she said.

In another commentary, Security Bank chief economist Robert Dan Roces said the Philippine economy likely grew by 6.8 percent in the fourth quarter of 2022 due to more Filipinos getting hired, persistent growth in the manufacturing sector, and a brisk consumer appetite for big-ticket items.

Citing data from the Philippine Statistics Authority, Roces said the latest unemployment rate in the Philippines has not only continued to go down but even fallen below the pre-pandemic level of 5.5 percent.

She also echoed the S&P Global Philippines Manufacturing purchasing managers index that is inclined toward expansion in December at 53.1 points for the 11th consecutive month.

He added that this industrial trend is “a good directional indicator of the GDP” and denotes improved output, a more optimistic prognosis for future business circumstances, and steady economic growth.

Roces, citing the Chamber of Automotive Manufacturers of the Philippines and the Truck Manufacturers Association, said vehicle sales in December alone increased by 34 percent, driving the full-year unit count past 300,000.

“If we use this as a proxy for consumption of big-ticket items, it shows consumers have confidence in forward financial conditions, hence large purchases notably in the latter part of the year,” she said.

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