4Q GDP rose 7.7%

PHILIPPINES - In Brief 27 Jan 2022 by Romeo Bernardo
As we expected, the Philippine economy left 2021 with a bang, growing 7.7% yoy in 4Q and sustaining a 3.1% seasonally-adjusted quarter-on-quarter growth. GDP growth was led by household consumption, with increased vaccination, fewer Covid-19 infections and easing of restrictions propelling a 7.5% yoy spending growth, including in discretionary services (e.g., retail trade, accommodation and food services). Investment growth decelerated with much weaker spending on durable equipment and construction, both public and private. Government continued to support the economy but current spending slowed down as well. On the supply side, both industry and services grew at faster clips while agriculture eked out a small gain. (See table below) Overall, the economy grew 5.6% in 2021, slightly ahead of our 5.5% forecast. Despite the good end to 2021, the economy lost its momentum following the new wave of Omicron infections, likely starting 2022 with a whimper. Considering as well reduced macroeconomic policy room, both monetary and fiscal, and the distracting midyear change in government, we are keeping for now our below consensus 5.5% growth forecast for the year.

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