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Accelerating inflation seen to hurt consumer spending, growth this year

People shop at a supermarket in Makati City. — PHILIPPINE STAR/ RUSSELL PALMA

THE Philippine economy may grow slower than initially expected this year, as accelerating inflation may hurt consumer spending, an economist said.

Security Bank Corp. Chief Economist Robert Dan J. Roces said he now expects gross domestic product (GDP) to expand by 6% in 2022, slower than the previous forecast of 6.5%. This is below the 7-9% growth target set by economic managers this year.

“We’re anticipating slower domestic consumption because of inflation. We’re seeing that emanate from rising commodity prices, not because of the war, so that could dampen recovery, although it’s not going to drain it,” he said at the bank’s virtual economic forum held on Thursday.

The central bank now expects inflation to reach 4.3% amid the surge in oil and commodity prices due to the Russia-Ukraine war. The consumer price index rose by 4% in March, already matching the upper end of the 2-4% target.

Ateneo de Manila University professor and former Socioeconomic Planning Secretary Cielito F. Habito said economic growth this year may get a boost from the election campaign. He said elections in the past contributed about one percentage point to growth, although this could be less now.

“This time, in the sense, a lot of it going into expenses in both mainstream and social media and perhaps a large part of it in social media,” Mr. Habito said.

“To that extent, or it’s not going as much into manufacturing and services. The effect of that will not be as inclusive or broadly benefiting,” he added. — Luz Wendy T. Noble

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