We are back.
The Philippine economy beat expectations by recording a spectacular growth of 7.2 percent in the last quarter of 2022. This in turn contributed to a 7.6 percent growth for the whole year. This was nothing short of astounding in the face of the debilitating impact of the pandemic, the continuing increase in the prices of goods, and the protracted conflict in Ukraine.
These negative factors failed to dampen strong domestic demand buoyed by the rise in employment, and the so-called “revenge” spending that exploded following the lifting of pandemic curbs and full reopening in the last three months of the year.
Expectations were understandably low in early 2022 due to these economic and political headwinds. I myself had doubts about our economic performance because of inflation that saw prices of oil and basic goods skyrocket. The disruption caused by the conflict in Ukraine added to the uncertainty.
But my gloomy sentiment was quickly replaced by an abundance of optimism when I began to observe a resurgence of consumer activities in retail. Statistics are important and they help us in understanding the overall health of the economy but I had my ear to the ground and I sensed a change in the behavior of Filipinos by the middle of the year.
The best way to describe it is when you are taking care of a sick person and you see the lethargy in the patient then after a while you begin to see him eating more, talking more enthusiastically, and turning from pale skin to a healthy hue. You just know that he is on his way to recovery.
I saw this when I began to observe people in my retail stores. Whenever I had the chance, I would visit our malls and walk around our properties. When I jog early in the morning, I would see more people, especially seniors, exercising or doing their Zumba routines outdoors. I saw a lot more people going to malls, restaurants, and coffee shops. I saw groups of people going out and enjoying each other’s company, families reverting to their pre-pandemic activities, and the population in general no longer exhibiting the fear of moving around.
Not surprisingly, the main contributors for the annual growth in the economy were wholesale and retail trade; repair of motor vehicles and motorcycles, 8.7 percent; manufacturing, five percent; and construction, 12.7 percent.
As a side note, Filipinos spent money buying new vehicles as auto sales surged by over 36 percent in the fourth quarter of 2022, and, full-year sales rising by almost 29 percent compared to the previous year.
The report by the country’s economic managers reveals some interesting numbers. The Household Final Consumption Expenditure (HFCE) grew by seven percent in the fourth quarter of 2022 and by 8.3 percent year on year. This meant that Filipino households spent more on goods and services for direct consumption including purchases of consumer goods and services.
In addition, our Gross National Income (GNI) grew by 9.3 percent in the 4th quarter of 2022 and by 9.9 percent for entire year. GNI measures and tracks a nation’s wealth by calculating the total amount of money earned by its people and businesses from year to year. In other words, robust spending was one of the factors that fueled our growth.
From a regional perspective, we were at par with the economic performance of Vietnam which had an equally spectacular GDP growth of eight percent in 2022 backed by strong domestic retail sales and exports. We performed better than China whose GDP grew by three percent in 2022.
This sterling performance, I believe, shows the strength of our fundamentals as well as the success of the initial months of the Bongbong Marcos presidency. Early on in his term, President Marcos, Jr. sent a clear and strong signal that the Philippines is back in business by setting clear economic goals and rationalizing pandemic restrictions in order to allow economic activities to return to normal.
There are still signs of danger ahead of course. Economists and policymakers have warned that a global slowdown and soaring inflation will make for a difficult year ahead. The United Nations have painted “a gloomy and uncertain economic outlook” saying that global economic growth will fall significantly to 1.9 percent in 2023 “as a result of the food and energy crisis sparked by the war in Ukraine, the impact of the Covid-19 pandemic, persistently high inflation, and the climate emergency.”
I have made the same prediction that 2023 will be a difficult year. But I also believe that our strong 2022 showing will allow our economy to perform better than expected. Rather than a gloomy scenario, I see an economy that will exceed expectations and beat out the gloomy predictions ahead.