2022 economic growth seen hitting govt target
THE Philippine economy will likely grow by 7.4 percent this year, First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research said on Friday, hitting the government’s 6.5- to 7.5-percent target.
In their November Market Call report, FMIC and UA&P Capital Markets Research said the forecast was largely influenced by robust third-quarter growth as well as record employment levels.
“With GDP (gross domestic product) bloating by 7.6 percent in Q3-2022 (third quarter of 2022), the economy will likely expand by 7.4 percent for the full year. Positive economic data released in October and early November should tone down pessimism gripping analysts,” they said.
With new peaks in employment levels and a peso depreciation boosting overseas Filipino worker, business process outsourcing and exporters’ incomes, FMIC and UA&P Capital Markets Research said growth should only show a mild easing in the last quarter of the year.
They also dismissed forecasts of a 2023 slowdown, saying, “We think that the spillover positive effects of record employment levels and an additional boost from peso depreciation will keep consumer spending along a six-percent growth path.”
“Contrary to projections of a significant slowdown in 2023, we expect the positive effects of the two above factors to contribute to a sustained fast growth of 6 percent in 2023,” they added.
Inflation, which soared to a nearly 14-year high of 7.7 percent in October, should also abate to below 5 percent next year.
“While we see a correction from the upward bias in October due to successive typhoons in Northern Luzon, headline inflation rate may only slightly slow down since crude oil prices have rebounded again. Thus, we make a further upward adjustment to full-year inflation to 5.7 percent,” they added.
Government spending and public-private partnerships are expected to accelerate in 2023 “as project launchings pick up from
the basic wait-and-see attitude for most of 2022” and “as contractors hurry to complete their projects before the year ends since the use of cash budget [subject still to multiyear allocations] came into force in 2021.”
They also projected that both bond and equity markets would likely recover “more decisively” in 2023.
“The economy’s robust fourmonth job creation until September engendered a more positive outlook even as investors hunted for bargains as the PSEi (Philippine Stock Exchange index) slumped. The PSEi rebound also got back-winds from the equity market gains in advanced economies,” FMIC and UA&P Capital Markets Research said.
“While ADB (Asian Development Bank) and other analysts expect a major slowdown in growth in 2023, the impact of a likely global recessions likely colored their views, which do not correspond to our own view which relies more on greater impact of employment expansion and peso depreciation on domestic incomes. For equities, while we still see the need for selectivity, banking and infrastructure-related firms would appear attractive.”