Philippines: Economy likely grew 4.6% in Q4

MANILA, Philippines — The Philippine economy likely posted a much slower growth rate in the fourth quarter of 2022 after posting above-seven percent growth in the first three quarters of last year, according to United Kingdom-based think tank Pantheon Macroeconomics.

“Growth likely fell to 4.6 percent year-over-year, after five straight quarters of seven percent prints or higher,” Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomic, said in a report released yesterday.

He said the momentum in consumption is expected to have faded substantially last year, with the growth seen in the third quarter likely to be only temporary.

Earlier, he said the revival of consumption in the third quarter amid high inflation was due to borrowings and a redirection of potential savings, which are both unsustainable.

From January to September 2022, the economy grew by an average of 7.7 percent.

National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan said last month that full-year 2022 economic growth could be higher than the 6.5 to 7.5 percent target, citing indications of a strong performance in the fourth quarter.

NEDA expects consumption to be among the drivers of growth in the fourth quarter, boosted by remittances that came in for the Christmas season.

Chanco said the release of the fourth quarter gross domestic product data on Jan. 26, before the Monetary Board meeting in February would be crucial, if the think tank’s below-consensus economic growth forecast is right.

For now, he said the think tank is maintaining its view that the Bangko Sentral ng Pilipinas (BSP) would take a pause on rate hikes.

“The January CPI (consumer price index) report, due a week before the (Monetary) Board meets in February, should confirm that inflation peaked last month,” he said.

The country’s headline inflation rate hit 8.1 percent in December, the highest in 14 years, due to faster food price upticks. This brought the full-year 2022 average inflation rate to 5.8 percent.

Last year, the BSP delivered a total of 350-basis-point rate hike to tame inflation, bringing the overnight reverse repurchase rate to a 14-year high of 5.5 percent.

BSP Governor Felipe Medalla earlier said the central bank was likely to raise rates by 25 to 50 basis points at its February meeting to anchor inflation expectations.