The National Economic and Development Authority (NEDA) remains optimistic that the Philippine economy will meet its growth targets this year despite the effects of various inflationary pressures, the country’s limited fiscal space, and the slowdown of global demand.
In his speech at the Fellows Meeting of the Foundation for Economic Freedom (FEF) held on September 1, 2022, NEDA Secretary Arsenio M. Balisacan said that domestic consumption and investment on the demand side, as well as the services sector on the supply side, has propelled the Philippine economy forward as consumers and businesses are already adjusting their economic decisions and expectations to the New Normal.
“The most recent data show us that household consumption contributes a significant 85% of economic growth on the demand side, while the services sector contributes about 67% to growth on the supply side. Both components are growing faster than the overall economy, indicating that their shares in GDP are expected to increase further. Gross fixed capital formation or investment is also exhibiting a solid performance,” the Cabinet official said.
Balisacan stated that the Philippine economy needs to grow by at least 5.3 percent in the second half of 2022 to meet the lower bound of the 6.5 to 7.5 percent target set by the Development Budget Coordination Committee for the year.
According to figures from the Philippine Statistics Authority (PSA), household consumption growth picked up to 8.6 percent in Q2 2022, resulting in a 9.3-percent average growth rate for the first semester of 2022. On the other hand, investment grew by an average of 12.6 percent in the first half of the year.
Balisacan also shared improvements in the country’s employment rate, noting that the labor force saw about 1.5 million additional Filipinos employed in June 2022 relative to June 2021. In addition, the unemployment rate fell to 6.0 percent in June 2022 from 7.7 percent in the same month last year. He attributes this to the economy’s reopening.
“With the reopening of the economy, buoyed investment confidence, the return of domestic and foreign tourism, as well as greater SME activities induced by face-to-face classes in the new normal, prospects for growth in the near term appear bright,” he said.
To sustain economic growth against the external headwinds, Balisacan highlighted the government’s priorities outlined in the 8-Point Socioeconomic Agenda, which focuses on both short-term and medium-term issues.
The medium-term priorities of the agenda aim to transform the Philippine economy by addressing binding constraints to robust job creation. Through greater utilization of public-private partnerships or PPPs, the Marcos Administration will promote investment in infrastructure, specifically energy, transportation and logistics, water, and telecommunications.
He said that these investments will also allow the country to capitalize on the demographic dividend, as the country’s working-age population has grown faster than the total 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,” said Balisacan.
