Philippines’ GDP growth accelerated to 7.6% in 2022

The Philippine economy expanded 7.6% last year, surpassing the government’s target as domestic consumption remained resilient despite soaring inflation.

Government data released Thursday showed gross domestic product growth was faster than the 5.7% recorded in 2021 and narrowly exceeded the government’s projection of 6.5% to 7.5%. The Philippines’ performance is among the strongest in the region and comes as President Ferdinand Marcos Jr. bids to attract foreign investors.

“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,” National Economic and Development Authority Secretary Arsenio Balisacan told reporters in Manila.

Accommodation and food services logged the fastest growth of 31.8%, after the government fully reopened the economy and lifted pandemic-era restrictions.

In the fourth quarter, GDP grew 7.2%, slower than the 7.8% in the same period in 2021 but still faster than the median forecast of 6.5% by 15 analysts polled by Reuters. The seasonally adjusted quarterly expansion stood at 2.4%.

“The improvements in labor market conditions, increased tourism, ‘revenge’ and holiday spending, and resumption of face-to-face classes supported growth in the quarter,” Balisacan said.

Pent-up demand fueled household consumption -- the country’s main economic driver -- which could moderate this year due to the “lag effect” of inflation.

“The high inflation that we are seeing today will impact the first quarter and second quarter; that’s why we have reduced the growth forecast for 2023 to 6% to 7%,” Balisacan said.

Philippine inflation in December quickened to a 14-year high of 8.1%, putting the full-year average at 5.8% and breaching the central bank’s goal of 2% to 4%. The central bank, which has aggressively raised interest rates, expects inflation to stabilize this year due to base effects.