PH hits 7.6% growth in 2022

AMID the global headwinds, the Philippine economy grew 7.6 percent in 2022, exceeding the government’s economic team target of 6.5 percent to 7.5 percent for the year.

Fourth quarter growth stood at 7.2 percent.

Among the major emerging economies in the region that have released their fourth-quarter 2022 real gross domestic product growth, the Philippines grew the fastest, followed by Vietnam at 5.9 percent and China at 2.9 percent, according to National Economic and Development Authority Director General Arsenio Balisacan.

The economy expanded by 2.4 percent, driven by increased economic activity mainly from pent-up demand as the economy fully reopened in the last three months of 2022.

“Our robust performance in the fourth quarter reflected strong domestic demand, with three-fourths contributed by household consumption and almost a fifth by investment. The improvements in labor market conditions, increased tourism, ‘revenge’ and holiday spending, and resumption of face-to-face classes supported growth in the quarter, further reflecting a solid rebound in consumer and investor confidence in the economy,” Balisacan said.

Main drivers of growth

The growth in domestic demand was met by expansion in the services and industry sectors, with production in most sub-sectors back to their pre-pandemic levels.

Services growth was mainly driven by wholesale and retail trade, while the expansion of manufacturing and construction subsectors supported industry growth.

Wholesale and retail trade; repair of motor vehicles and motorcycles, grew 8.7 percent; financial and insurance activities, grew 9.8 percent; and manufacturing grew 4.2 percent during the fourth quarter.

Industries contributing the most to the full-year growth were wholesale and retail trade; repair of motor vehicles and motorcycles, up 8.7 percent; manufacturing, five percent; and construction, 12.7 percent.

However, agricultural output slightly declined in the fourth quarter by 0.3 percent. For the full year of 2022, this sector grew by 0.5 percent while the industry and services grew by 6.7 percent and 9.2 percent, respectively.

Solid growth

“It’s a surprisingly solid growth,” said Charles Kenneth Co, president of Cebu Chamber of Commerce and Industry. “But take note, we were coming from a lower base in 2021.”

In 2021, the country’s GDP growth was at 5.7 percent.

Kelie Ko, president of Mandaue Chamber of Commerce and Industry (MCCI), said the full-year 2022 growth is “welcome news.” “It means that we are well on our way to recovery.”

Entrepreneur Steven Yu, MCCI’s former president, in a separate interview said the 7.6 percent growth rate “exceeded expectations and showed the resilience of the Philippine economy despite the numerous headwinds.”

“It certainly brings hope for the future amid a still challenging global economy and the slowdown in developed countries,” said Yu.

Muted growth, challenges

Amid the continued growth trajectory, the business sector is projecting a muted six to seven percent growth for 2023 percent growth due to fading revenge spending, continuing rise in interest rates, and the threat of global recession.

“Inflation and interest hikes are the main challenges because while we want to continue growing, we don’t want too much growth that will cause prices to increase,” said Co.

Yu cited the need to bring down food inflation through imported supply, while continuing the thrust to develop local food sources to attain self-sufficiency. There is also a need to halt interest rate increases and possibly do a reversion in the second semester to stymie recessionary pressures and the need to aggressively open tourism to be ahead of the curve and generate more jobs and employment.

“We hope that tourism and hospitality will post strong gains in 2023 when the world begins to travel. These are the sectors that have still to post a full recovery,” said Ko.

Co, on the other hand, hoped that the foreign direct investments that President Ferdinand “Bongbong” Marcos Jr. has been soliciting will create more jobs and opportunities locally. He also expects the government to resume spending on infrastructure projects this year.