THE country’s gross domestic product (GDP) has grown by 6.4 percent in the first quarter of 2023, National Economic Development Authority (Neda) Secretary Arsenio Balisacan reported on Thursday, May 11, 2023.
Balicasan said the GDP growth is within the median estimates of analysts and within the government’s target of 6.0 percent to 7.0 percent for the whole year but lower than the 8.0 percent year-on-year growth rate recorded during the same period in 2022.
He, however, said that there is a need “to exercise caution in interpreting this as a slowdown since the previous year’s growth came from a low base.”
“Moreover, among major emerging economies in the region that have released their first quarter 2023 real GDP growth so far, the Philippines grew the fastest, followed by Indonesia (5.0 percent), China (4.5 percent), and Vietnam (3.3 percent). The country’s growth is also more rapid than the forecasted first quarter growth rates for Malaysia (4.9 percent), India (4.6 percent), and Thailand (2.8 percent),” the official said in his speech during the Philippine Economic Performance for the First Quarter of 2023.
“Rather, the economy is normalizing its previous trend. The better-than-expected first-quarter performance this year implies that we are returning to our high-growth trajectory despite the various challenges and headwinds we have faced. However, we have much more work to realize our social and economic transformation agenda toward a prosperous, inclusive, and resilient Philippines,” he added.
Balisacan noted the “rapid pace” in the gross fixed capital formation or investment expansion of 10.4 percent year-on-year on the demand side, which reflects a “robust public construction performance primarily driven by the road infrastructure and railway projects of the Department of Public Works and Highways and the Department of Transportation.”
He said it was faster than household final consumption expenditure of 6.3 percent and government final consumption expenditure of 6.2 percent.
Balisacan said that exports of goods and services only increased by 0.4 percent “in the face of weak global demand,” while imports of goods and services rose by 4.2 percent.
On the supply side, the secretary said all major economic sectors -- agriculture ( 2.2 percent), industry (3.9 percent), and services (8.4 percent) -- recorded positive growth this quarter, citing the agriculture sector’s growth was mainly due to the favorable weather conditions even in the expected challenge of the El Nino phenomenon or long dry spell later in the year.
Balisacan added that the performance of these sectors translates into the latest labor force statistics, showing improvements not only in terms of a lower unemployment rate, from 5.8 percent in March 2022 to 4.7 percent in March 2023, but also in terms of a lower underemployment rate, notably, the invisible underemployment rate, which declined from 5.6 percent in March 2022 to 3.5 percent in March 2023.
He expressed confidence that with adequate planning and preparation, the country can surpass again the effects of El Niño.
El Niño
The Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa) earlier said that the recent conditions and model forecasts indicate that El Niño may emerge in the coming season from June to August with an 80 percent probability and may persist until the first quarter of 2024.
El Niño is a weather pattern characterized by unusually warm ocean temperatures in the equatorial Pacific, which can have significant impacts on weather patterns across the world.
In 2015-2016, the Philippines experienced one of the strongest El Niño events on record, which caused significant damage to crops and led to water shortages in some areas.
President Ferdinand “Bongbong” Marcos Jr. earlier ordered the creation of a task for the mitigation of El Niño.
“So contraction in agriculture caused by El Niño may not deeply impact the economy, although it may deeply impact households because more than 20 percent of our labor force is dependent on agriculture,” Balisacan said.
“The other part of El Niño is the supply of electricity, some of our power plants are dependent on dams. It could affect the availability of power. I think we’ve learned much from El Niño management,” he added.
Balicasan said that improvement in the business climate can counter the unintended effect the high inflation, which remains a challenge and the move of the Bangko Sentral ng Pilipinas to raise its key policy rates to anchor inflation expectations and ensure price stability may dampen future growth.
The country’s inflation rate has further eased to 6.6 percent in April 2023, 13 percent lower than the 7.6 inflation during the month prior.
“We anticipate this downward trend to continue as inflation eventually eases toward the government’s target range by the fourth quarter of 2023. Indeed, the latest inflation report numbers look promising: food inflation declined from 9.5 percent in March to 8.0 percent in April 2023, while non-food inflation declined from 6.3 percent in March 2023 to 5.5 percent in April,” Balisacan said.
“Ensuring that we not only go back to our high-growth path but, more importantly, achieve significant social and economic transformation by the end of this administration’s watch, involves fully implementing the strategies laid out in the Philippine Development Plan 2023-2028. The strategies call for developing and protecting the capabilities of Filipinos and transforming our production sectors to generate more quality jobs and competitive products while ensuring a conducive overall investment environment in terms of governance and government policies,” he added.
Balisacan said they will continue to “remain vigilant,” at the same time, focused on implementing a social and economic transformation agenda.
He said they are also ready to respond to the shocks and risks to the country’s growth outlook “both domestic and external, foreseen and unforeseen.” (SunStar Philippines)