Hongkong and Shanghai Banking Corp. raised on Friday its 2022 gross domestic product growth forecast for the Philippines to 7.1 percent from the previous estimate of 6.9 percent following the improvement in the country’s employment and export figures.
HSBC said in a report it revised upward its fourth-quarter GDP growth projection to 5.5 percent from 4.9 percent.
“Consequently, this lifts our full-year 2022 growth forecast from 6.9 percent to 7.1 percent, which means growth will likely fall within the government’s 2022 growth target of 6.5 percent to 7.5 percent,” the bank said.
“The Philippine economy exhibited pockets of resilience in the final quarter of 2022. Exports performed well above expectations despite the global tech cool down and despite forward-looking indicators in the Philippines signaling exports to eventually fall,” it said.
It said jobs exhibited strong growth in the quarter. “More adults were available to rejoin the workforce to contribute to the economy, with kids finally back―physically―in school,” the bank said.
The British bank, however, maintained its view “that the Philippines will likely grow below trend in the next two years: 4.4 percent in 2023 and 5.2 percent in 2024,” as it cited the impact of higher interest rates and the possible easing in consumption, investment and even trade.
“But amidst the displays of resilience, cracks are getting larger, brought by the lagged effects of both high inflation [currently the highest in ASEAN] and high interest rates. Households have dipped into their savings in response to today’s higher cost of living. Thus, consumption should slow in 2023 as households readjust their purchases and start to build their savings back up,” it said.
History also shows that a high-interest environment will likely put a drag on growth by reining in both consumption and investment, it said.
The government is set to release the fourth-quarter and full-year 2022 GDP data on Jan. 26.
The economy expanded by 7.6 percent in the third quarter, faster than 7 percent a year ago, bucking the domestic and external headwinds such as the rising interest rates, elevated inflation and geopolitical tensions in Eastern Europe.
It gained strength from the agriculture, industry and services sectors. Agriculture and forestry grew by 2.2 percent; industry by 5.8 percent; and services by 9.1 percent.
GDP growth averaged 7.7 percent in the first three quarters, surpassing the target range of 6.5 percent to 7.5 percent set by the government.
The last time the economy grew by 7.7 percent in the first three quarters was in 2010.