The economy is expected to expand by 6.5 percent for the full-year despite the projected higher-than-target inflation of 5.5 percent, according to the Market Call.
According to the report released yesterday, with Christmas season around the corner and consumers and firms “itching” to go out after the two-year “incarceration,” the employment data is expected to hit new records starting September.
The report said national government spending, especially on infrastructure, agriculture and key projects, should accelerate in the coming months since it still has a lot of “unused” deficits for the last four months of 2022.
Firms’ optimism also showed in the acceleration of capital goods imports in August, it said.
“We expect manufacturing output to rise further in Q4 even as the national government ratchets up spending on infrastructure and agriculture. The unexpectedly strong tax collections has led to lower projected debt-to-GDP (gross domestic product) to 63 to 64 percent in 2022,” the Market Call said.
“Elevated inflation remains as the only sore point, but as pointed out earlier, its negative effect on consumer spending should be muted by higher peso incomes of overseas Filipino workers (OFW), business process outsourcing workers and exporters. We, thus, see GDP growth in 2022 of 6.5 percent, at the upper end of our projections, while we may expect an inflation rate of 6.9 percent in October,” it added.
The report said inflation is easing slightly slower than desired due to elevated crude oil prices.
“However, the latter has shown weakness after the initial announcement of the record two million barrels of OPEC output cut. OPEC apparently did the preemptive move to avoid a meltdown in prices (to $50-$70/barrel due to the spreading global recession),” the report said.
“The USD-PHP rate will remain under pressure, but OFW remittances in Q4 and likely more aggressive action by the BSP (Bangko Sentral ng Pilipinas) in both policy rates and other measures should prevent it from even coming close to P60/$1,” it added. – Angela Celis