Security Bank sees PH economic growth at 6.8% in Q4

The Philippine economy likely grew by 6.8 percent in the fourth quarter of 2022 compared with its size in the same three months of 2021 thanks to more Filipinos getting hired, persistent growth in the manufacturing sector and brisk consumer appetite for big-ticket items.

Security Bank chief economist Robert Dan Roces said in a commentary that latest data have shown that the unemployment rate in the Philippines has not only continued to go down, but even fell below the prepandemic level of 5.5 percent.

The Philippine Statistics Authority (PSA) reported that jobless rate registered at 4.2 percent based on the Labor Force Survey done in November 2022.

Still, the PSA said this was consistent with the seasonal boom of temporary jobs as the holiday season approached.

The National Economic and Development Authority has reiterated the need for more “higher-quality” jobs.

Meanwhile, the S&P Global Philippines Manufacturing PMI (purchasing managers index) leaned toward expansion for the 11th month in a row in December at 53.1. A reading above 50 means an expansion in factory activities while anything below that points to a contraction.

Roces said such a trend in manufacturing, “a good directional indicator of the GDP (gross domestic product),” indicated a more positive outlook on forward business conditions, better production and stable economic activity.

Further, vehicle sales in December alone increased by 34 percent, driving the full-year unit count past 300,000, the highest since the COVID-19 pandemic started in 2020, according to the Chamber of Automotive Manufacturers of the Philippines and the Truck Manufacturers Association.

“If we use this as a proxy for consumption of big ticket items, it shows consumers have confidence in forward financial conditions, hence large purchases notably in the latter part of the year,” Roces said.

He added that the fourth-quarter performance brought the full-year growth rate to 7.5 percent, which is at the upper end of the national government’s target range.

The economist said the GDP may have registered a total of P19.9 trillion from P18.5 trillion in 2021. The PSA will release the official data on Jan. 26.

For 2023, Roces forecasts growth to be slower at 6.3 percent, which is below the midpoint of the target range of 6 percent to 7 percent.

Roces said the delayed effects of interest rate hikes, continually high inflation in the first semester, a global slowdown that could slow growth of remittances from overseas Filipino workers, and consumers reducing expenses would be dampeners to growth.

“But given intact economic fundamentals due to sustained economic reopening, there is no stagflation nor recession scenarios expected in 2023 for the Philippines,” he said.

Despite the widely expected recession in the United States and Europe, forecasts show the Philippine economy will continue to grow briskly this year and may be among the best performers in Southeast Asia.