Finance Secretary Benjamin Diokno said Thursday the strong gross domestic product growth will likey be sustained in the fourth quarter based on economic numbers such as the improving employment situation, declining world oil prices and the recovery of the peso against the US dollar.
“The recent economic numbers all point to a sustained, strong fourth-quarter economic performance,” Diokno said in a message to reporters.
“The jobs market continues to improve…, manufacturing output is rising and capacity utilization rate is improving. The peso has stabilized and is growing stronger, and oil prices are falling to near pre-Russian invasion of Ukraine levels,” Diokno said.
He said with the strong fourth-quarter growth, the implication is that with the peso stabilizing and oil prices falling, inflation would soon fall.
Diokno said the Bangko Sentral ng Pilipinas expected inflation to average 5.8 percent this year, then slow down to the upper bound of the 2 percent to 4 percent target band in 2023, before settling at the midpoint of the target band by 2024.
“With the recent numbers, the likelihood that the BSP forecast, which was subsequently adopted by the DBCC [Development Budget Coordination Committee] will be achieved, is getting stronger,” he said.
The country’s labor market in October bounced back to its pre-pandemic level after the unemployment rate dropped to 4.5 percent from 7.4 percent a year ago. It was the lowest rate recorded for all October rounds since 2019, the Philippine Statistics Authority said Wednesday.
The October jobless rate was also lower compared to the 5 percent recorded in September.
The employment rate increased to 95.5 percent, the highest record since the start of the pandemic. This translated into an employment level of 47.1 million in October, or 3.3 million higher than a year ago.
The manufacturing sector aso posted its highest average capacity utilization rate for the year at 72.4 percent in October. The PSA said that almost a fifth (19.9 percent) of firms operated at full capacity, and that some 40.4 percent operated at 70-percent to 80-percent capacity.
Oil fell close to the lowest level this year, pressured by concern about global recession. Dubai crude went down to $75.12 per barrel on Dec. 6, 2022.
Meanwhile, the peso appreciated further against the dollar on Wednesday to close at 55.45, up from 55.975 a dollar on Tuesday. A holiday fell on Thursday. The peso hit a record low of 59 against the greenback four times in October.
The World Bank raised its 2022 gross domestic product growth forecast for the Philippines to 7.2 percent from a previous estimate of 6.5 percent on expected higher consumer demand amid the reopening of the economy.
The bank expects growth to taper off to an average of 5.7 percent in 2023 due to elevated inflation and higher interest rates.
It said this year’s forecast rides on the momentum of a 7.7-percent growth in the first three quarters, buoyed by the removal of remaining restrictions on people’s mobility and business operations and the recovery of incomes and jobs.
Meanwhile, the inter-agency DBCC maintained its GDP growth forecast of 6.5 percent to 7.5 percent this year. The economy expanded by 7.6 percent in the third quarter, faster than 7 percent a year ago.
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