Philippine Economy at Full Throttle
The Philippine economy can be likened to a money train—it keeps on expanding robustly and nothing, for now, can stop it from speeding ahead.
I am one of those least surprised about the economy’s performance in 2022. The solid gross domestic product growth of 7.6 percent in 2022 lends credence to reports that the Philippines emerged from the pandemic as one of the fastest-growing economies in Southeast Asia, if not the world, today.
The World Economic Forum (WEF) attended by President Ferdinand Marcos Jr. in Davos, Switzerland has identified the Philippines as a member of the “VIP Club” of Southeast Asian countries with best-performing economies.
The Philippines achieved the growth through economic reopening and without seeing another surge in new virus cases. The Department of Health has even reported a steady decline in infections despite the hectic economic activities in the fourth quarter.
The government’s strategy to reopen the economy, while remaining vigilant on the health situation, has paid off. It lifted business confidence and encouraged companies to invest in the future.
Our gross domestic product expanded 7.6 percent in 2022, faster than the 5.7-percent growth in 2021 and above the government’s target range of 6.5 percent to 7.5 percent for the year, per the national income accounts report of the Philippine Statistics Authority. The economic expansion is the fastest since 1976.
The services sector led the 2022 growth with 9.2 percent, followed by industry with 6.7 percent and agriculture with 0.5 percent. On the demand side, household spending grew 8.3 percent in 2022, while government expenditure increased 5.0 percent.
Wholesale and retail trade rebounded strongly, while manufacturing and construction contributed substantially to overall growth.
The full reopening of the economy in the last quarter of 2022, capped by the resumption of face-to-face classes, and the lifting of most pandemic restrictions led to revenge spending, a strong domestic demand and more jobs.
The 7.2-percent expansion in the fourth quarter marked the seventh consecutive quarters of growth of above 7.0 percent based on constant 2018 prices. It put the Philippines in the list of fastest-growing economies in the Asia-Pacific region in the fourth quarter of 2022, exceeding Vietnam’s 5.9 percent and China’s 2.9 percent.
If we could sustain this pace of recovery, coupled with the appreciation of the peso and the deceleration of inflation this year, we could see further reduction in the unemployment and poverty rates and improvement in Filipinos’ quality of life. We may also achieve the upper-middle economy status by 2024, after the pandemic derailed our target in 2020 and 2021.
I am optimistic this growth narrative will draw the attention of foreign investors. President Marcos has actively promoted the Philippines as a promising investment destination in his meetings abroad. He expounded not only on the solid economic recovery of the Philippines, but also on the investment-friendly policies that are now in place, as well as the new Philippine Development Plan and the 8-Point Socioeconomic Agenda.
I believe the Philippines is ready for more foreign investments this year, with the start of major infrastructure projects that will improve mobility and transportation in the country.
We passed several laws to further open the economy to foreign capital in a bid to create more jobs for the Filipino people. Unemployment rate, meanwhile, dropped to 4.2 percent in November 2022, the lowest in 17 years.
Foreign investments will augment local production and enable us to improve our exports. The ultimate goal, of course, is to become a net-exporting country to cure any deficiency in our balance of payments. If we could also boost agricultural production and lessen our food imports, we may be less vulnerable to price spikes in the world market.
We need to reinvigorate the agriculture sector to meet the growing demand of our population of about 110 million. Agriculture has lagged behind in the growth cycle over the years and now accounts for just a tenth of our gross national income.
The revival of the agriculture and fishery sector will determine how fast the economy will grow in the succeeding years. Agriculture’s contribution will hopefully bring down poverty incidence from 18.0 percent of the population in 2021 to a single-digit level by 2028, and make the economic growth more inclusive.
I have confidence we can achieve our economic goals by working as one nation and with one clear vision for the future.