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Persistent inflation will reduce GDP growth by 0.6% next year - Balisacan
By TED CORDERO,GMA NewsThe country’s projected economic growth next year will be slashed if inflation continues its uptrend in the remaining months of the year until 2023, the country’s chief economist said Tuesday.
At a Palace briefing, Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) chief Arsenio Balisacan said the Marcos administration is “particularly concerned about higher inflation.”
In September, inflation—the rate of increase in the prices of consumer goods and services—accelerated to 6.9%
, its highest level in four years, due to continued increases in food and utility costs.This brought the year-to-date inflation rate to 5.1%, within the government's 4.5% to 5.5% target range for 2022.
“Our analysis shows that sustained increases in inflation in 2022 and 2023 will cause a slowdown in our economic growth, translating into a GDP (gross domestic product) level lower by 0.6% in 2023 than its expected level had there been no sustained inflation shock,” Balisacan said.
The Marcos administration’s economic managers are expecting the country's economy, as measured by GDP—the total value of goods and services produced in a specific period—to grow by 6.5% to 8% annually from 2023 to 2028.
As of the second quarter of 2022, the economy grew by 7.4%, slower than the 8.2% GDP growth in the first quarter, bringing the first half growth to 7.8%.
“As a small, open economy, the Philippines cannot escape the effects of these global headwinds. The Marcos administration is indeed mindful of these challenges,” Balisacan said.
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"While we expect our poverty situation to improve as we continue our recovery, inflation and rising interest rate will mute this improvement."
The Marcos administration is aiming to cut the poverty rate to 9% by the end of its term in 2028.
Balisacan said that the rise in inflation would be temporary since “it is expected to slow down and return to the medium-term target of 2% to 4%.”
“We maintain that the country's economic prospects remain bright as we get our priorities straight and our acts right,” he said.
“This outlook is borne out by the World Bank's recently released October forecast for 2022 and 2023: it expects the Philippines to grow by 6.5% in 2022, second only to Vietnam among major ASEAN economies, and by 5.8% in 2023—again faster than Indonesia, Malaysia, and Thailand.”
“Similarly, [the] ADB (Asian Development Bank) and the ASEAN+3 Macroeconomic Research Office (AMRO) project Philippine economic growth to remain robust in 2022 and 2023, with the economy expected to grow by 6.5% to 6.9% in 2022 and 6.3% in 2023,” he added. — VBL, GMA News