GDP rise, easing unemployment and inflation rates pave pathways to sustainable growth

Three years after the onset of the pandemic that plunged the economy into a steep recession, the Philippine Statistics Authority’s most recent announcements on three key indicators of the country’s economic health evoked reasonable optimism.

First, the unemployment rate declined to 4.7 percent compared to the year-ago rate of 5.8 percent; the unemployed numbered 2.42 million, down from 2.87 million in March last year. Second, the inflation rate dropped to 6.6 percent in April, down from 7.6 percent in March; it was the lowest since August 2022. Third, gross domestic product (GDP) grew by 6.4 percent in the first quarter, although it was the lowest growth registered after seven quarters when the country started to recover from the pandemic in the second quarter of 2021.

But while GDP growth, as noted in a new report of the Asian Development Bank (ADB), “is expected to moderate this year from 2022’s forecast-beating outturn, (it) will remain on a healthy expansion mode, underpinned by rising domestic demand and a recovery in services particularly tourism.”

Underemployment — which counts those looking for more work or an extra job — fell to 11.2 percent. From 7.4 million under-employed a year earlier, the latest figure is down to 5.4 million. This shows that the economy is revving up to a faster growth pace, even as inflation rates continue to rise but still within the targeted levels. The slower pace of consumer price increases is seen by the Bangko Sentral ng Pilipinas as an indicator that the higher end of the target rate of inflation — from two to four percent — could be attained by end-2023.

The ADB explains its forecast on the country’s “robust growth” scenario: “A recovery in employment and retail trade, sustained expansion in the manufacturing sector, and rising public infrastructure spending will support growth. However, risks from a sharper-than-expected slowdown in major advanced economies, heightened geopolitical tensions, and inflation stickiness could dampen the outlook for gross domestic product (GDP) growth.”

Clearly, overall quality of public governance is a vital prerequisite to attaining sustained growth amid continuing challenges. President Marcos has actively participated in APEC and ASEAN summits, held high-level talks with President Joe Biden and other world leaders, and set forth the major directions of the country’s foreign policy. The Philippine-US military alliance has been firmed up with four additional Expanded Defense Cooperation Agreement (EDCA) sites. This is aimed at interoperability of security forces not only for defense but also for disaster relief and rehabilitation.

Meanwhile, the extension of the Malampaya oil and gas production and exploration service contract to 2039 assures a measure of stability in the country’s energy security. On the micro-level, leading firms are declaring healthy financial results in contrast to the doldrums of recession and unclear prospects during the past three years. This would enable a sharper focus on ensuring environmental sustainability and extending social protection to the most vulnerable members of Philippine society.