Bullish amid wars

Two hot wars and a trade war are ongoing. “They are causing geopolitical tensions and putting pressure on the global economy, which is already struggling with high inflation and interest rates, imbalanced trade deficits and higher fiscal deficits globally,” Finance Secretary Ralph Recto told the Manila Overseas Press Club’s “Finance Night” March 20.

Despite the wars and the geopolitical tensions, Ralph remains bullish about the economy, although he now concedes growth could slow down.

“But while global prospects remain clouded with uncertainties, there is one area of consensus among economists: Asia’s economic powerhouses, particularly the Philippines, are set to lead growth over the next decades,” Ralph said.

International research firms attest to the Philippines’ high growth rates. “They are projecting the Philippines will join the ranks of the world’s top 20 largest economies by mid-century,” he gushed.

“Fast forward to 2075, Goldman Sachs’ forecast positions the Philippines as the 14th largest economy globally, outpacing France,” Recto smiled broadly.

These projections “are indeed a strong vote of confidence in our ability to orchestrate a rapid economic expansion in the years to come.”

If international rating agencies and analysts are bullish about the Philippine outlook, why not Filipinos themselves? “Thus, we will do our best to achieve or even surpass these forecasts via a set of growth-enhancing strategies,” Ralph said. In his MOPC speech, the Finance chief said: First, we will continue to bolster our macroeconomic strength through prudent fiscal management.

Today, we are the fastest-growing economy in the ASEAN region, expanding by 5.6 percent in 2023. This demonstrates our continued strength, stability and resilience in adverse conditions.

Multilateral organizations validate the vigor of our economy, expecting us to be a frontrunner in ASEAN with a projected GDP growth of 5.8 percent to 6.3 percent in 2024.

Our growth trajectory has been fueled by sustained domestic consumption, which is proving to be a robust shield against external factors contributing to the global economic slowdown.

This strong consumer spending, which continues to account for more than 70 percent of the economy, is being supported by a vibrant labor market.

Filipinos engaged in formal and stable work continue to represent the largest portion of the workforce in the country. This is an indication of a strong and growing middle class.

The robust remittance inflows from our overseas Filipino workforce also sustain domestic consumer demand.

The strong rebound of the tourism industry as reflected by the rising tourism receipts as well as the hefty BPO export revenues give us confidence that we have ample buffers against external headwinds.

These, along with our low external debt and healthy reserves that exceed standard benchmarks, should keep our currency stable and resilient to adverse external shocks.

Our growth is further bolstered by an inflation rate that is well under control, with February’s 3.4 percent comfortably falling within the government’s target band of 2 to 4 percent.

Our comprehensive Reduce Emerging Inflation Now or REIN plan will ensure that inflation remains within our target range.

The plan involves proactively preparing the country to mitigate the effects of El Niño on inflation through strengthening agricultural production to ensure food security.

Our efforts to exercise fiscal discipline have resulted in a much stronger fiscal house.

In 2023, our fiscal deficit continued to narrow down to 6.2 percent of GDP from its peak of 8.6 percent at the height of the pandemic.

This narrowing deficit path is attributed to the consistently higher government revenue collections and improved expenditure management.

As of January of this year, the national government posted a larger budget surplus of P88 billion, 92.25 percent higher than last year.

The fiscal outturn was brought about by a faster 21.15 percent year-on-year increase in revenues, reaching P421.8 billion.

The robust revenue collection outpaced the 10.39 percent expansion in government spending, which sped up to P333.9 billion.

This means we are well above the target of collecting P11.7 billion a day to support our average daily spending of P15.8 billion.

The significant reduction of the deficit signifies ongoing stabilization of our debt.

In 2023, our debt-to-GDP ratio further dropped to 60.2 percent from the peak of 60.9 percent in 2022.

We are currently reviewing the Medium-Term Fiscal Framework to ensure that our targets reflect realities globally and domestically and that we pursue a growthenhancing fiscal consolidation.

Our high credit ratings summarize all our efforts to maintain fiscal discipline. This is a strong vote of confidence in our sound economic policies and a big win for ordinary Filipinos as it translates to more accessible financing for the government’s development programs.

This will allow us to channel funds that would have otherwise been allotted for interest payments towards more infrastructure projects, improved social services, a better health care system and quality education.

To fund the increasing needs of our people, we will focus on growing our revenues further by plugging tax leaks, improving tax administration – a process that will take some time – and preventing wasteful expenditures.

The Bureau of Internal Revenue and the Bureau of Customs are accelerating digitalization initiatives to enhance tax administration efficiency and ease the payment of taxes.

Through the Ease of Paying Taxes Act, processes are already streamlined and taxpayers can now file and pay their taxes electronically anywhere in the country.

Five tax reform measures are underway to improve revenue mobilization, further sharpen our fiscal toolkit and modernize the Philippine tax system.

The revenue measures maximize our gains and institute fairness and fiscal consolidation.

Our greatest competitive advantage rests in our people. With an average age of 25, we are harnessing the energy and talent of millions of young and well-educated Filipinos by investing heavily in education and social services.

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