MANILA - The Bangko Sentral ng Pilipinas on Thursday said it does not view stagflation as an immediate risk for the Philippine economy.

Stagflation happens when there is slow economic growth, high inflation and a high unemployment rate.

In a statement, the BSP said it remains optimistic that the Philippines will sustain its economic recovery.

The country's gross domestic product (GDP) growth reached 8.3 percent in the first quarter, reversing the 3.8 percent contraction in the same period the previous year, the central bank noted.

The increased credit activity, ample domestic liquidity and favorable market sentiment could also boost economic activities, the BSP added.

Employment has also improved and is approaching pre-pandemic levels, it said. The unemployment rate eased to 5.7 percent in April from 5.8 percent in March.

• 2.76 million jobless in April as unemployment eases to 5.7 percent: PSA

"Domestic labor conditions also continue to improve, with employment now approaching pre-pandemic levels following the easing of COVID-related mobility restrictions and sustained vaccination efforts," it added.

Inflation, however, is seen to remain elevated in the near term due to supply-side factors linked to volatile global commodity prices. But it is expected to revert to the government's target range of between 2 to 4 percent in 2023.

Given the inflation risks, direct and targeted interventions by the national government are "critical" in tempering supply-side pressures, the BSP said.

Inflation soared to 5.4 percent in May driven by higher oil and commodity prices.

• Inflation quickens further to 5.4 percent in May

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