NEDA declares the Philippine economy will meet its target despite inflation and demand.
Despite the effects of multiple inflationary pressures, the country's limited fiscal space, and the slowing of global demand, the National Economic and Development Authority (NEDA) is still optimistic that the Philippine economy will reach its growth objectives this year.
NEDA Secretary Arsenio M. Balisacan said at the Fellows Meeting of the Foundation for Economic Freedom (FEF) last September 1 that the Philippine economy has advanced due to domestic investment and consumption on the demand side, as well as the services sector on the supply side, as consumers and businesses have already adjusted their economic decisions and expectations to the new normal.
“The most recent data show us that household consumption contributes a significant 85 percent of economic growth on the demand side, while the services sector contributes about 67 percent to growth on the supply side. Both components are growing faster than the overall economy, indicating that their shares in gross domestic product (GDP) are expected to increase further. Gross fixed capital formation or investment is also exhibiting a solid performance,” he added.
Balisacan said for the Philippine economy to achieve the lower limit of the 6.5 to 7.5 percent growth set by the Development Budget Coordination Committee for the year, it must expand by at least 5.3 percent in the second half of 2022.
Philippine Statistics Authority (PSA) data showed that household consumption growth increased to 8.6 percent in Q2 2022, giving the first semester of 2022 an average growth rate of 9.3 percent. In the first half investment increased on average by 12.6 percent.
Balisacan also discussed increases in the country's employment rate, pointing out that 1.5 million more Filipinos were working in the labor force in June 2022 than in June 2021. In addition, the unemployment rate decreased from 7.7 percent in June 2021 to 6.0 percent in June 2022. He attributes this to the economy's reopening.
“With the reopening of the economy, buoyed investment confidence, the return of domestic and foreign tourism, and greater activities of small and medium size enterprise (SME) induced by face-to-face classes in the new normal, prospects for growth in the near term appear bright,” he said.
Balisacan emphasized the government's goals listed in the 8-Point Socioeconomic Agenda, which focuses on both short- and medium-term issues, to continue economic growth against the external headwinds.
The medium-term priorities aim to transform the Philippine economy by addressing binding constraints to robust job creation. Through greater utilization of public-private partnerships (PPPs), the Marcos administration will promote investment in infrastructure, specifically energy, transportation and logistics, water, and telecommunications.
He noted that these investments will also help the country to benefit on the demographic dividend since the country’s working-age population has expanded faster than the entire population in recent years.
“Through investment, the country can equip this growing segment of the population with the sufficient tools and infrastructure that will greatly raise its productivity,” Balisacan said.
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