Philippine GDP beats forecasts in Q4, government sees 2022 acceleration

MANILA — The Philippine economy expanded faster than expected in the fourth quarter of 2021, buoyed by robust consumer spending, with the government optimistic that growth will accelerate this year despite a resurgence in coronavirus cases and inflation risks.

The Southeast Asian country’s gross domestic product rose 7.7% in the December quarter from a year earlier, faster than a downwardly revised 6.9% expansion in the previous quarter, and beating a 6.0% forecast in a Reuters poll.

That took full-year GDP growth to 5.6%, exceeding the government’s 5.0%-5.5% target and marking a sharp rebound from a record 9.6% contraction in 2020 amid prolonged COVID-19 lockdowns.

The economy grew 3.1% in the December quarter from the preceding three months.

“The door to economic recovery is now fully open,” Socioeconomic Planning Secretary Karl Kendrick Chua told a briefing, as he predicted growth would accelerate this year. “We are on the correct path to a resilient recovery.”

The Philippines is aiming to achieve GDP growth rates of 7.0%-9.0% for 2022 and 6.0%-7.0% for both 2023 and 2024, banking on an accelerated vaccination drive to allow the economy to reopen further.

Household consumption rose 7.5% in the fourth quarter from a year earlier, up from a 7.1% increase in the third quarter, and the biggest contributor to overall growth.

Growth in government spending, however, slowed to 7.4% from the September quarter’s 13.8%.

The three main economic sectors – agriculture, industry and services – posted positive growth rates of 1.4%, 9.5%, and 7.9%, respectively, in the fourth quarter.

The Philippine central bank, which has kept its key rate at a record low of 2.0% since November 2020, has vowed to prioritize an economic recovery, suggesting it will not raise interest rates anytime soon.

The government has, however, reimposed coronavirus curbs in the capital region and a number of provinces since the start of the year due to a resurgence in infections driven by the more transmissible Omicron variant. (Writing by Enrico Dela Cruz Editing by Ed Davies)