Amid high inflation that has left Juan de la Cruz reeling from outrageous prices of fuel and other basic goods, the good news is that the national economy is growing—and that such growth could extend well into 2023.
The National Economic and Development Authority (NEDA) broke the good news last week: the Philippine economy grew by 7.6 percent in the third quarter, faster than the 7.5 percent expansion in the second quarter of this year and the 7.0 percent growth rate in the third quarter of last year.
This makes the Philippines second only to Vietnam in real GDP growth for the quarter.
Most economic sectors sustained their expansion.
The services sector grew by 9.1 percent, while industry posted 5.8 percent growth. The agriculture sector also grew by 2.2 percent, up from a 1.7 percent decline in the same period last year.
Most sectors have already returned to their pre-pandemic output levels.
Domestic demand remained robust with a 9.5 percent growth, driven by accelerated growth in household consumption and investments.
Exports grew by 13.1 percent and imports, by 17.3 percent. The growth in exports and imports was driven by services, particularly growth in travel.
The economic planning agency is confident that the government can very well achieve its growth target of 6.5 to 7.5 percent for 2022.
Given the 7.7 percent growth rate for the first three quarters, the economy needs to grow by 3.3 to 6.9 percent in Q4 2022 to meet this year’s target.
For NEDA, amid higher global inflation and the slowdown in the world economy, our government must boost domestic demand, and increase and improve the competitiveness of domestic production to sustain and further accelerate economic recovery.
In the immediate term, however, the government must provide targeted assistance and implement measures to ensure adequate supply of food and other essential goods to the most vulnerable sectors.
NEDA’s announcement of better-than-expected GDP growth has been welcomed by House Speaker Martin Romualdez, who said that “President Marcos’ silent hard work on uplifting the economy is beginning to work.”
The Leyte lawmaker said he himself “witnessed how the President engaged business stakeholders here and abroad with the purpose of moving forward from the ravages caused by the COVID-19 pandemic.”
The House of Representatives, he vowed, would follow through with policies that will further build on this economic growth.
House ways and means committee chairperson Joey Salceda also believes “there is momentum for growth,” with the fourth quarter likely to be better than the third, thus quite possibly making the country’s economic performance this year the strongest in the region, and one of the best in Asia.
Where does the lawmaker’s optimism come from?
For one thing, OFW remittance figures jumped in August, near the end of the quarter.
The Bangko Sentral ng Pilipinas (BSP) showed cash remittances sent through banks stood at $2.72 billion in August, higher than the $2.60 billion a year earlier. This boosted household consumption.
Another bright spot, he pointed out, is the 24.79 percent year-on-year growth in tax collections in September. This means that economic activity, the base of taxation, is getting stronger.
Moreover, the manufacturing sector created 1.09 million jobs in the last quarter: “Manufacturing jobs growth tends to indicate positive macroeconomic fundamentals,” Salceda said.
Marikina City 2nd District Rep. Stella Quimbo, senior vice chairperson of the House Committee on Appropriations, is just as upbeat about the country’s economic prospects. Despite high inflation in the third quarter of 2022, she said: “We saw growth in output. On the supply side, all sectors grew. At the same time, domestic demand remained robust.”
At the same time, Quimbo expressed confidence that the Marcos administration’s planned expansion of cash assistance (“ayuda”) or subsidy programs would further the country’s economic turnaround.
She is correct in saying: “At this point, the best defense against inflation is domestic output expansion. The government has been providing fuel and fertilizer subsidies to boost agricultural production. We should consider expanding this program to better support our producers.”
News reports indicate that the Marcos administration is eyeing the provision of P206.50 billion worth of subsidies and cash aid under the proposed 2023 national budget to support vulnerable sectors amid surging commodity prices caused by global inflation.
The Department of Social Welfare and Development (DSWD) will get a big chunk of the budget, with P165.40 billion to be allocated for the implementation of various social assistance programs.
Quimbo explained that providing assistance to affected sectors is one way for government to boost spending as it “enables greater consumption and well-being, especially when targeted to the most vulnerable sectors.”
In the long run, however, the government must exert efforts to improve the productivity of the agricultural sector and invigorate Philippine industry to reduce our country’s exposure to volatile global prices and global supply shocks.
“As the economy slowly reopens, we should exploit the existing advantage of the sectors that stand to gain from a weakening peso, such as tourism and export industries,” the lawmaker explained.
The Marcos administration is taking the right steps in boosting economic growth amid global inflation that has led to increased domestic prices of fuel and other basic commodities.
That we have managed to post modest GDP growth despite high inflation offers ample proof that the administration’s economic managers are doing a good job. Our hope is that the growth will continue and be as inclusive as possible so that no one is left behind. (Email: email@example.com)