By Luisa Maria Jacinta C. Jocson, Reporter
PHILIPPINE economic growth likely slowed sharply in the first quarter as consumption weakened amid elevated inflation and rising borrowing costs, analysts said.
“While we believe private consumption continued to be a key driver of growth given its high share, the momentum has likely been slowing as the reopening boost has faded while high inflation remained a headwind,” Makoto Tsuchiya, assistant economist at Oxford Economics, said in an e-mail.
He said first-quarter gross domestic product (GDP) had likely expanded by 4.4%, much slower than the 8.2% a year earlier and 7.1% in the fourth quarter of 2022.
The government is targeting 6-7% GDP growth this year.
ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said the better-than-expected 7.6% growth last year was driven by robust household consumption.
However, household spending, which is one of the biggest contributors to Philippine economy, has been affected by high inflation that reached a 14-year high of 8.7% in January.
“We believe the (growth) momentum will slow in the first quarter of 2023 given the triple threat of peak inflation, elevated borrowing costs and muted support from government spending,” Mr. Mapa said in a Viber message.
“It would be hard to count out an upwards surprise in first-quarter growth given how open the economy is and the pace of household spending,” he added.
To curb inflation, the Bangko Sentral ng Pilipinas (BSP) has hiked borrowing costs by 425 basis points (bps) since May 2022, bringing the benchmark rate to 6.25%.
Inflation slowed to 7.6% in March from 8.6% in February, which the BSP has said is consistent with its assessment that inflation would remain elevated in the near term but gradually return to the 2-4% target by the fourth quarter.
“We certainly are starting to see signs of a peak in the surge in household borrowing that helped to power private consumption last year,” Pantheon Chief Emerging Asia…
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