The Philippine economy likely grew by as much as 9% in the second quarter, according to Bangko Sentral ng Pilipinas (BSP) Governor Felipe M. Medalla.
However, Mr. Medalla told reporters on Friday that he expects gross domestic product (GDP) growth to be “slower” in the second half of 2022.
Asked if GDP may have expanded by double digits in the April to June period, he said: “I don’t think so, maybe around 9%, 8%.”
Mr. Medalla said his personal GDP growth projection this year is 7%, the midpoint of the government’s 6.5% to 7.5% target.
Economic activity picked up in the second quarter, as most parts of the country were under the most lenient alert level.
Mr. Medalla said consumption growth and capital formation have been expanding rapidly this year.
In the first quarter, household consumption grew by 10.1% year on year, higher than the 7.5% in the previous quarter and a reversal of the 4.8% decline in the first three months of 2021. This accounted for about three-fourths of the country’s economic output and added 7.5 percentage points to the 8.3% GDP growth in the first quarter.
Capital formation, the investment component of the economy, jumped by 20% in the first three months of 2022, reversing the 13.9% decline last year.
However, the Philippine outlook for 2023 may be clouded by the expected slowdown in the global economy.
“Ang mahirap (It’s difficult to see) what happens next year because if markets are all growing more slowly saan manggagaling ’yung growth (where will growth come from),” Mr. Medalla said.
The International Monetary Fund (IMF) last week slashed global growth forecasts for 2022 and 2023, noting the risks from elevated inflation and the Russia-Ukraine war may push the world economy to a recession. Global GDP is expected to grow by 3.2% this year, and 2.9% in 2023.
The IMF raised its GDP growth forecast for the Philippines to 6.7% this year, from 6.5% previously, but lowered the 2023 GDP projection to 5%, from 6.3% previously.
During an online business forum hosted by The Manila Times on Friday, Mr. Medalla said the government’s GDP targets are achievable, thanks to strong foreign direct investments (FDIs), and consumer and business sentiment.
“So I’m actually quite bullish on the economy under the current president…I would say 80% of the economy is now way above pre-pandemic levels,” he said.
Latest data from the BSP showed that FDI net inflows climbed by 48.3% to $989 million in April from $667 million in the same month in 2021. This was the highest monthly FDI inflow recorded since the $1.06 billion in December last year.
Mr. Medalla also said the economy could accommodate the BSP’s aggressive monetary policy to tame inflation.