Philippines Survived an Eventful Year
What a year it was. We opened 2022 with alarm as Covid-19 cases in the country surged again with the Omicron variant becoming the dominant strain in January. The Russia-Ukraine war broke out in late February, disrupting the global chain supply and sending world oil and grain prices soaring.
Global inflation started to rise in the aftermath of the Russian invasion of Ukraine. The Philippine economy and consumers slowly felt the effects of high oil prices and the ensuing increase in transport fares. Our central bank had little choice in response but to raise interest rates to pre-empt a runaway inflation.
By early May, the nation elected a new president who assumed the reins of power from President Rodrigo Duterte. A big majority of the Filipinos voted Ferdinand Marcos Jr. as the nation’s new chief executive and Sara Duterte-Caprio as vice president.
It was a smooth transition of power—from a popular president to an equally popular successor. President Ferdinand Marcos Jr. inherited a government that successfully waged a battle against Covid-19 and which made the vaccine available to all Filipinos at no cost.
Mr. Marcos was in a way lucky to have been handed an economy that not only survived the pandemic onslaught but expanded as well. The Philippine economy grew 7.8 percent in the first six months of 2022—the last two quarters of the Duterte administration. The last six months of the previous administration marked five consecutive quarters of gross domestic product growth since the economy contracted at the height of the pandemic in 2020 and the first quarter of 2021.
Mr. Marcos in no time assured Filipino and foreign businessmen that there would be no drastic shift in the business policy of the new administration. He vowed and continued to pursue a business-friendly policy—one that would be both fair to investors and consumers.
The stock and the rest of the financial markets, Filipino businessmen and foreign investors welcomed Mr. Marcos’ pro-business stance. He continued to adopt an infrastructure program that Mr. Duterte started—and even went one step ahead.
The new administration is expanding the flagship infrastructure program of its predecessor, calling it aptly BBM or Build, Better, More—from the previous mantra of BBB or Build, Build, Build.
“We shall confidently build on this firm foundation established by my predecessor. As it is in building an edifice, we must keep the momentum and aspire to Build Better More,” President Marcos said in a recent Cabinet meeting.
The BBB flagship infrastructure program of former President Rodrigo Duterte covered a total of 112 big-ticket projects. The previous administration, however, passed on some 94 projects worth P4.5 trillion to the Marcos administration. Mr. Marcos vowed to “not suspend” any ongoing projects that have already “been shown to be of benefit to the public that they serve.”
Infrastructure projects, like I have been saying in this column, are critical to the expansion and modernization of the Philippine economy. I will sound like an economics professor here, but infra projects like roads, bridges, airports, seaports and rail networks create jobs and speed up the flow of goods and services.
They significantly reduce travel time of commuters, link up the farmers’ produce to the market faster and create new job opportunities. More importantly, they raise the income level in the countryside, thus, making economic growth more inclusive.
The business-friendly policy of the Marcos administration has produced initial positive results. The nation’s gross domestic product expanded by 7.6 percent year-on-year in the third quarter, faster than the 7-percent growth a year ago—despite domestic and external headwinds, like rising inflation and interest rates.
The GDP expansion was higher than the revised 7.5-percent growth in the second quarter amid easing mobility restrictions. The Q3 growth brought the average economic expansion in the first three quarters to 7.7 percent, or above the government’s 2022 target range of 6.5 percent to 7.5 percent.
The economic performance in the third quarter put the Philippines second in the region, behind Vietnam’s 13.7-percent growth and ahead of Indonesia’s 5.7-percent expansion.
The Philippines has weathered the pandemic and seems to have tamed the virus, just like the rest of the world. It is overcoming a high inflationary regime and registering impressive growth rates. It is generating more employment. These strides make me optimistic about our economic prospects in 2023.
To our readers, MERRY CHRISTMAS and HAPPY NEW YEAR!