The Southeast Asian economy is on pace to fulfill the government’s 2022 growth objective, according to an official.
The Philippine economy expanded at a faster-than-anticipated pace in the third quarter, but the government warns that the recovery is not risk-free due to increasing interest rates and skyrocketing inflation, both of which might dampen consumer spending.
The economy grew 7.6 percent in the third quarter compared to the same period last year, according to figures released on Thursday.
During a media conference, economic planning secretary Arsenio Balisacan predicted that the economy will likely exceed the government’s 2022 growth goal of 6.5 to 7.5%.
The figures revealed that on a quarterly basis, gross domestic product (GDP) increased by 2.9%, compared to a decrease of 0.1% in April-June and an anticipated increase of 1%.
“While these improvements are exceptional, I would want to emphasize that our country still bears a significant burden in the form of rising inflation,” stated Balisacan.
Inflation reached a 14-year high in October, bolstering expectations for a sixth rate hike at the Bangko Sentral ng Pilipinas’ (BSP) November 17 meeting.
The BSP said on November 3 that it would match the Federal Reserve’s rate increase of three-quarters of a percentage point to strengthen the peso, which has lost 12.3 percent versus the US dollar so far this year.
In spite of a series of rate rises, GDP in the Philippines averaged 7.7 percent in the nine months leading up to September, aided by the complete reopening of the economy as the government has gradually eased COVID-19 restrictions since the beginning of the year.
Balisacan said that the government was dedicated to combating inflation to safeguard the buying power of the populace, including through tightening monetary policy.
He said, “We cannot afford not to adapt (rates) with the rest of the world.”
The report indicated that household consumption increased 8 percent in the third quarter compared to the same time last year, which was slower than the previous quarter’s 8.6 percent rise but greater than last year’s 7.1 percent increase.
“In the context of rising prices, this is a significant positive surprise,” said Nicholas Mapa, an economist at ING.
