MANILA – President Ferdinand Marcos Jr trumpeted the Philippines’ quickest economic growth rate in recent storage at the World Economic Forum in Davos in a bid to stoke new buyer interest in his country.
According to the newest data released with the Philippine Statistics Specialist (PSA), the Southeast Asia nation’s gross domestic product (GDP) expanded by a massive 7. 2% within the fourth quarter associated with 2022.
The particular robust expansion, mostly a reflection associated with post-pandemic “revenge spending”, bumped the Philippines’ 2022 growth price to 7. 6%, the highest level in 46 years. The last time the country grew this fast had been under former strongman Ferdinand Marcos Sr, when the country submitted an 8. 8% growth rate in 1976.
Buoyed by robust growth at home, the particular Philippines is contemplating a massive US $372 billion infrastructure development program over the following decade. During a latest meeting with the Philippine president, the Worldwide Monetary Fund’s (IMF) managing director Kristalina Georgieva hailed the particular Philippines as an “exceptionally well-performing country. ”
For their part, the Filipino Senate President Miguel Zubiri, a top Marcos ally, praised the current administration because of its “clear economic targets and their solid push to sell the country as an investment hotspot. ” Touting the country’s economic dynamism, Marcos Jr apparently guaranteed $46. 2 billion in brand new investment pledges during his whirlwind foreign journeys in recent months.
At the same time, Marcos Jr can’t ignore runaway inflation in basic commodity prices, with widespread reports of hoarding, illegal smuggling and bad planning hammering the country’s food industry. Galloping inflation comes just two years following the Philippines posted its worst recession in almost 8 decades.
With all the prospect of worldwide recession on the horizon with no end in sight for the inflation-stoking Ukraine war, the Philippines can be bracing for new rounds of external shocks in the coming several weeks. Without decisive and politically difficult financial reforms, analysts state Marcos Jr may struggle to maintain the current economic growth momentum needed to finance his expensive mega-project program.
To be sure, Marcos Jr has reason to be upbeat regarding the Philipines’ economic prospective customers. The country’s fourth-quarter performance widely surpassed the six. 5% growth prediction of top Filipino economists collated in. a Reuters election. On a quarter-on-quarter foundation, economic growth was 2 . 4% in the October-December period.
Economic Planning Secretary Arsenio Balisacan, a widely-respected technocrat who has worked in a variety of administrations, attributed the particular stellar growth number to robust domestic demand, expansion within labor markets, plus “revenge” spending following the relaxation of years-long pandemic-related restrictions.
Wholesale and retail trade, manufacturing, construction and motor vehicle fixes were top contributing factors to growth. On the sector basis, farming, industry and solutions posted growth rates of 0. 5%, 6. 7%, and 9. 2%, respectively, with the services (60. 1%) sector because the top contributor.
“We are pleased to receive the news that our growth rate for that year 2022 exceeded all expectations even by the estimates of the international financing organizations, and we are holding at 7. 6%, ” declared Marcos Jr in a video message released with the Presidential Communications Office (PCO) on The month of january 27.
“We must maintain, nevertheless , that growth price and that is why it has become so important for all of us to go out and to attract investment into the Philippines because that is the only way for financial activity to increase and thus to grow the economy, ” he additional, just days right after concluding his 8th foreign trip.
The Filipino chief executive, accompanied by a 70-strong abordnung which includes top tycoons and business leaders, met last week with worldwide policy-makers and traders in Davos, Switzerland.
During her meeting with Marcos Jr , IMF chief Georgieva recognized the Filipino innovator for “what you have done in the last year of turbulence to maintain growth [which is] is quite good, ” according to Philippine Presidential Communications Admin Cheloy Garafil.
Among those in Marcos Jr’s delegation had been Jaime Zobel sobre Ayala of the Ayala Group, Lance Gokongwei of JG Peak Holdings Sabin Aboitiz of Aboitiz & Company, Enrique Razon of International Pot Terminal, Teresita Sy-Coson of SM Opportunities, Kevin Andrew Tan of Alliance Worldwide, Ramon Ang associated with San Miguel Corp. A top priority for your Philippine delegation was to attract new investments, particularly within the infrastructure sector.
In contrast to the Duterte administration, which depended largely on sovereign financing and overseas loans, the current administration is intent on expanding public-private-partnership (PPP) projects.
During a recent trip to Frankfurt where Filipino officials met Western investors, National Economic and Development Expert (NEDA) Secretary Arsenio M. Balisacan unveiled a massive $372 billion infrastructure advancement program covering more than 3, 600 facilities projects to run via 2028.
Currently, there are 87 PPP projects in the pipeline amounting to $54 billion, underscoring the particular shift in facilities development strategy under the Marcos Jr administration. Most short-term tasks are also expected to be PPPs.
“With those tasks, we’ll see a main transformation of the country in the next six many years. There’s no much better time than how to invest in the Philippines. We’ve opened the economy quite thoroughly and the opportunities are quite high, ” Balisacan added.
The rapid economic growth rate, however , conceals many fundamental difficulties. For one, the growth spurt comes just two years after the nation suffered its worst recession since the finish of World War II. Between 2020-2021, the Philippines suffered five consecutive quarters of economic downturn, a decline that will created a low bottom effect for fast growth in the instantly succeeding years.
Runaway inflation is a more immediate worry, with Balisacan caution it could “negate what we should have achieved in recent years” because food inflation drives a large number of Filipinos closer to the poverty series despite rapid GROSS DOMESTIC PRODUCT growth. In the third quarter associated with last year, close to 3 mil Filipino families experienced “involuntary hunger”, according to the Social Weather Stations (SWS) survey.
The costs of onions, garlic clove and eggs have rapidly risen in recent months , amid reports of poor government preparing, smuggling and illegal imports adding to inevitable external price stresses.
As the acting agriculture secretary, Marcos Jr has come under growing pressure to slice down his abroad travels in order to concentrate on pressing problems at home, including the need to crack straight down on profiteering intermediaries and alleged syndicates . Modern groups have also called on the particular president to protect domestic farmers through financial assistance as well as decisive activity against growing unlawful imports of meals commodities.
The government expectations that inflation, currently at a 14-year high, will cool down in the coming months. Yet absent major reforms in the domestic food industry, and with Marcos Jr yet in order to appoint a permanent agriculture secretary, there are worries that the inflation issue will persist throughout 2023.
Furthermore, the country’s wide economic growth encounters growing headwinds, such as the prospect of a worldwide recession, rising interest rates in major economies and new inflationary pressures driven by strong post-zero-Covid rebirth of Chinese household consumption.
“We expect a difficult season ahead for the Philippines, ” London-based Capital Economics research organization said in a latest report, which expects the Southeast Hard anodized cookware nation to grow in a much slower price of 5. 5% this year with little indication inflation can fall any time soon.
Follow Richard Javad Heydarian on Twitter at @Richeydarian