Official says the Southeast Asian economy is on track to meet the government’s 2022 growth target.
The Philippine economy grew faster than expected in the third quarter, but the government said the recovery is not without risks, given rising interest rates and rising inflation that could weigh on consumer spending.
Supported by pent-up domestic demand, the economy grew 7.6 percent in the third quarter from a year earlier, official data showed on Thursday.
The economy is likely to grow above the government’s 6.5-7.5 percent growth target for 2022, Economic Planning Minister Arsenio Balisacan told a media briefing.
On a quarterly basis, gross domestic product (GDP) rose 2.9 percent from a 0.1 percent contraction in April-June and a projected 1 percent increase, the data shows.
“While these developments are remarkable, I would like to underline that our country continues to face a significant burden in the form of high inflation,” Balisacan said.
Rising import costs, exacerbated by a weaker peso, propelled inflation to nearly 14-year highs in October, bolstering expectations of a sixth rate hike at the Bangko Sentral ng Pilipinas (BSP) meeting on Nov. 17.
A 75 basis point hike appeared in the bag after the BSP said on Nov. 3 it will match the Federal Reserve’s three-quarters percentage point rate hike to support the peso, which has lost 12.3 percent against it so far. the US dollar this year.
Despite the series of rate hikes, the Philippines’ growth in the nine months to September averaged 7.7 percent, helped by the full reopening of the economy as the government continues to lift COVID-19 restrictions from early this year.
Balisacan said the government remains committed to fighting inflation to protect people’s purchasing power, including by tightening monetary policy.
“We cannot afford not to adjust the rates to the rest of the world,” he said.
Household consumption rose 8 percent in the third quarter from a year ago, slower than the pace of 8.6 percent in the previous quarter, but faster than the 7.1 percent growth in the same period last year, according to a report. evidenced by the data.
“Given the rising prices, this is a big positive surprise,” said ING economist Nicholas Mapa.