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Philippines economy on track to grow by 6.5% this year
MANILA, Philippines — The Philippine economy is on track to grow by 6.5 percent this year, with consumption spending and hiring seen to continue in preparation for the Christmas season despite high inflation, according to First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research.
“We still see GDP (gross domestic product) growth for the full year at 6.5 percent, despite higher-than-target inflation at 5.5 percent,” FMIC and UA&P Capital Markets Research said in the Market Call report for October released yesterday.
The GDP forecast is at the lower end of the government’s 6.5 percent to 7.5 percent growth target for the year.
As of the first semester, the economy grew by 7.8 percent.
While inflation remains a concern for both consumers and the government, FMIC and UA&P Capital Markets Research said its negative effect on consumer spending should be muted by the higher peso incomes of overseas Filipino workers (OFWs), business process outsourcing employees and exporters.
FMIC and UA&P Capital Markets Research expect the inflation rate to be steady at 6.9 percent in October.
Inflation hit a four-year high of 6.9 percent in September from 6.3 percent in August, amid faster increases in food prices.
For the January to September period, inflation averaged 5.1 percent, higher than the Bangko Sentral ng Pilipinas’ (BSP) two to four percent target band.
FMIC and UA&P Capital Markets Research said economic data released in September reflected more economic activity as pandemic restrictions have been set aside.
In terms of employment, new jobs were added to the economy for the fourth straight month, with a 479,000 uptick seen in August, which brought employment to another record 47.9 million.
“With consumers and firms eager to normalize, the coming Christmas season should further boost employment, which saw more jobs especially in trade and transport and storage sub-sectors,” FMIC and UA&P Capital Markets Research said.
They expect employment to hit new records starting September.
Aside from employment, they said revenue collections of the Bureau of Internal Revenue, which rose by more than 23 percent year-on-year to P228.94 billion in August, reflect lively economic activity.
With unused deficits in the last four months of the year, FMIC and UA&P Capital Markets Research said government spending particularly on infrastructure and agriculture should accelerate in the coming months.
Capital goods imports, which rose 15.2 percent in August from 6.6 percent a month earlier, also reflect business optimism.
While the peso is expected to remain under pressure, OFW remittances in the fourth quarter and the expected more aggressive action by the BSP should prevent the local currency from getting near the P60/$1 level.
Source: https://www.philstar.com/business/2022/10/27/2219475/philippines-economy-track-grow-65-year