EXPENSIVE goods and services are not expected to dampen the prospects of the economy this year, according to the National Economic and Development Authority (Neda).
Socioeconomic Planning Secretary Arsenio M. Balisacan said the country’s primary economic drivers are domestic consumption and investment, which are expected to grow in the coming months.
Balisacan noted that domestic consumption and investment already account for 85 percent of the demand side of the economy. Another major driver, Services, contributed around 67 percent of GDP’s 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,” Balisacan said.
Balisacan said the Philippine economy only 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.
Based on figures from the Philippine Statistics Authority (PSA), household consumption growth picked up to 8.6 percent in Q2 2022.
This led to a 9.3-percent average growth rate for the first semester of 2022. Meanwhile, investment grew by an average of 12.6 percent in the first half of the year.
Balisacan also said 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.
Further, the unemployment rate fell to 6 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,” Balisacan 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 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.
Between January and July 2022, the PSA data showed inflation averaged 4.7 percent. In July alone, inflation reached 6.4 percent.
The inflation in July was the highest since October 2018 when the rise in commodity prices reached 6.9 percent. The PSA is set to release the August inflation data on Tuesday.
Image credits: Bernard Testa