Eleveted, night view of Makati, the business district of Metro Manila
Eleveted, night view of Makati, the business district of Metro Manila. Image Credit: Shutterstock

Manila: The Philippines' economic growth beat expectations last year, fuelled by strong consumer spending despite rising consumer prices, officials said Thursday.

Gross domestic product expanded 7.6 per cent in 2022, the state statistics agency said in a briefing, faster than the pandemic-blighted 5.7 per cent output in 2021.

The reading topped the government's target of 6.5 to 7.5 per cent growth.

"There was so much pent-up demand... and that significantly improved economic activities," Socio-economic Planning Secretary Arsenio Balisacan said in a briefing.

"We are confident that we will remain in our high growth trajectory," he added.

Growth in the last three months of the year also beat expectations, expanding 7.2 per cent against a 6.6 per cent median estimate in a Bloomberg survey of economists.

"The improvements in labour market conditions, increased tourism, revenge and holiday spending, and resumption of face-to-face classes supported growth in the quarter," Balisacan said.

Agricultural production, however, grew just half a per cent last year, barely contributing to the overall output.

Consumer spending weathered rising inflation as pent-up demand to spend in restaurants and entertainment as well as more jobs fuelled domestic demand, Balisacan said.

"Clearly, if not for the high inflation and elevated prices during this period, growth could have been higher," Balisacan said.

Inflation hit 8.1 per cent in December, the fastest in 14 years, prompting the central bank to aggressively raise interest rates. Inflation stood at 5.8 per cent for the full year, above the bank's target.

Balisacan said keeping commodity prices in check and ensuring food security are at the top of government's priorities "as global and domestic headwinds persist".

Officials are aiming for growth of 6-7 per cent this year amid fears of a global economic slowdown.

"That is a very respectable growth for the Philippine economy if we achieve that."