The Davao Region's economy had now surpassed pre-pandemic levels, as it posted 8.1 percent economic growth in 2022 from 5.9 percent in 2021, an Philippine Statistics Authority - Davao Region (PSA-Davao) official said.
“We are pleased to announce that the 2022 level had already surpassed the pre-pandemic level in 2019 by around P53.2 billion,” Randolph Anthony Gales, PSA-Davao regional director officer-in-charge, said during the News Conference on the 2022 Economic Performance of Davao Region at the Pinnacle Hotel and Suites Davao on Thursday, April 27, 2023.
Gales said the Davao region’s economy was estimated to be at P954.1 billion in 2022. The Davao Region's output in 2019 was valued at P900.9 million.
Meanwhile, Gales also said the Davao region’s economy was estimated at P954.1 billion in 2022 from about 882.2 billion pesos in 2021, an estimated increase of P71.9 billion.
“At constant 2018 prices, the economy of Davao region in 2022 accelerated to 8.1 percent from the 5.9 percent equal strength in 2021,”
The economic performance of the region is being measured by the Gross Regional Domestic Product (GRDP) and Gross Regional Domestic Expenditure (GRDE).
Gales also noted that the services sector was main contributor of Davao region’s 8.1 percent economic growth. The services sector grew by 6 percent, followed by industry sector (1.6 percent), and agriculture, forestry and fishing (0.5 percent).
“The expanding Davao economic growth of 8.1 percent was driven mainly by the growth of the services sector, and agriculture, forestry, and fishing,” Gales said.
Davao Region’s growth rate of 8.1 percent is higher than the 2022 national growth average of 7.6 percent. The region is also the third highest in the country trailing behind Western Visayas (Region VI), which posted 9.3 percent growth, and Cordillera Administrative Region (CAR) with 8.7 percent.
“The [2022] data has exhibited a strong economic performance and fundamentals of the region, multi-dynamic private sector, and reinforced by a healthy labor market,” National Economic and Development Authority-Davao Region (Neda-Davao) director Maria Lourdes Lim said in a video statement.
“Davao Region has fully regained its economic strength, landing as the fourth fastest growing regional economic region in the Philippines, tied with Calabarzon and Bicol Regions,” Lim added.
Lim also said the year 2022 was a year of “robust growth and resilience” from a “recovering and readjusting” economic outlook from the pandemic during 2021 for Davao Region, as the region retains its status as the biggest regional economy in Mindanao, contributing 4.8 percent of the national economy.
“The better performance of the [Davao Region] economy is indicative of the efforts of the government and the private sectors, bestowed in the regional economy’s high growth trajectory by boosting economic activity and production and healthy businesses flow while creating more and better quality jobs, improving infrastructure, and accelerating poverty reduction,” Lim said.
Lim said the service sector had demonstrated “strong performance”, the agriculture sector registered moderate gains, while the industry sector had been “decelerating”.
Meanwhile, John Carlo Tria, Davao City Chamber of Commerce and Industry Incorporated (DCCCII) president, said due to the Davao Region’s healthy and fast-growing economy, this would also make Davao City an “attractive investment destination”
“A healthy and fast-growing economy also makes us an attractive investment destination, since robust growth means that good return on investments are expected. This creates opportunities for many,” Tria said.
However, Tria said the region must overcome the challenges of high inflation, which “limits the purchase of materials and services” which might reduce production activities and business expansion.
“Moving forward, we need to harness potentials further to accelerate this growth and opportunity. We can build on this growth by boosting inclusivity through encouraging participation in formal financial networks such as government-authorized banks, financial entities, and cooperatives,” Tria said.
Agriculture
Lim said the agricultural sector recorded a “minor” growth, as it posted 3 percent growth in 2022 from 2021’s 0.8 percent. The sector posted a P146 billion output for 2022.
“This suggests that the value of the agricultural production in 2022 only marginally increased,” Lim said.
Lim said it can be attributed to “modest improvements” in the agriculture supply chain, effective response and continuing measures against the African Swine fever (ASF) and avian flu diseases, and an increasing consumer demand due to expanding economic activities and more favorable climatic conditions.
LIm also said the production of crops such as palay, corn, cacao, durian, and abaca posted “slight increases” which can be attributed to the government interventions, the easing of travel restrictions, and the increased production areas for these crops.
The growth can also be attributed to the recovery of backyard farming and the active involvement of local government units and private sectors in livestock and poultry, which contributed to the increase in chicken, cattle, and chicken egg production.
Meanwhile, the fisheries had significantly improved with its commercial production and municipal fisheries, which “posted a 100 percent increase.” Aquaculture also posted a 16 percent increase in growth for 2022.
“The increase is attributed to the increased localized mendings of commercialized fishing vessels, and municipal fishing boats in the region, as well as the full operation of aquaculture farms due to the lifting of the travel restrictions,” Lim said.
Industry
Meanwhile, the industry sector posted 6.4 percent growth in 2022, a decrease from the 9.9 percent growth rate in 2021.
Lower growth rates were registered from manufacturing at 3.9 percent, electricity, steam, water, and waste management at -2 percent, and construction at 10 percent,
“The low economic outputs from these industry sub-sectors can be attributed to the negative effects on the high and abstain inflation experience for 2022,” Lim said.
Lim said the high inflation had really influenced the industry sector, which can be attributed to the high oil prices caused by geo-political conflicts, the depreciation of the Philippine peso which led to higher costs in energy and food imports, and the second-round effects of increased fares and wages.
“The high inflation rates experience in 2022 was attributed to a higher input cost in production in the industry sector and may help cascade all other production outputs,” Lim said.
However, Lim said the mining and quarrying sector posted 27 percent in 2022, an increase compared to 21.9 percent in 2021. The growth can be attributed to the generation of higher local sales of minerals, a much higher volume of minerals extracted, and the increasing exports of gold and other minerals
Meanwhile, construction posted a 10 percent growth in 2022, lower than 2021’s 12.5 percent.
“It’s [Construction] still a positive performance, and can be attributed to sustained infrastructure spending of the national government in Davao Region including those for Build Build Build projects despite the political transition year [2022].
Services
Meanwhile, the services sector grew by 10.3 percent in 2022 from 5.5 percent in 2021. The sector also continued to form the largest portion of the pie of the regional economy at 59.9 percent.
The sector covers wholesale and retail trade, repair of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities; information and communication; financial and insurance activities; real estate and ownership of dwellings; professional and business services; public administration and defense, compulsory social activities; education; human health and social work activities; and other services.
Sub-sectors within the umbrella include the accommodation and food service activities sector with 35.6 percent, transportation and storage at 26.7 percent, information and communication services at 10.5 percent, financial and insurance activities at 9.5 percent, and wholesale and retail trade at 9 percent.
Lim said the accommodation and food service activities posted a “solid performance” for 2022, posting a 35.6 percent growth in 2022 from 10.8 percent in 2021. The growth can be attributed to the gradual ease of pandemic restrictions
“The growth also exhibits strong healthy consumer and demand in the region including an increase in tourists arrivals and tourism activities,” Lim said.
Meanwhile, Lim said the “vigorous expansion” of the transportation and storage sector posted 28.7 percent in 2022 from 2.2 percent indicates a remarkable resurgence in transportation services and revenues, whether via land, air, or water transport, along with housing and storage services in the region.
The ICT industry also posted 10.5 percent in 2022 which can be attributed to the increasing subscribers and demand for internet connection.
“The performance of this subsector is also attributed to increased demand for data and home broadband segments especially in response to the flexible work arrangements, online learning and other e-commerce activities,” Lim said.
As for the other subsectors, wholesale and retail trade, repair of motor vehicles and motorcycles sector grew by 9 percent from 4.3 percent; real estate and ownership of dwellings grew by 5.9 percent to -15.6 percent; professional and business services rose by 9.3 percent from 8.1 percent; other services increased by 20.2 percent from 1.4 percent, while public administration and defense, compulsory social activities; and financial and insurance activities had increased by 9.5 percent from 5.2 percent in 2021.
Meanwhile, the education sector posted a minimal increase of 7.9 percent from 8.3 percent in 2021.
Demand side
Lim reported that the expenditure growth was primarily driven by imports of goods and services from the rest of the world which expanded by 15.7 percent by 2022 from 13.1 percent in 2021
Gross capital formation recorded 11.5 percent for 2022, a slight decrease from 13.1 percent in 2021, then exports of goods and services to the rest of the world at 9.5 percent from -2.7 percent, and household final consumption expenditure at 4.7 percent.
“This increase in expenditures can be attributed to the lifting of travel and utility restrictions for most of the population, thereby resumption of most of the businesses and workplaces, and the resumption of face-to-face classes among others,” Lim said.
Gross capital formation was followed by imports of goods and services (8.2 percent from -18.6 percent); government final consumption expenditure (5.5 percent from 5.9 percent); and Household final consumption expenditure or household spending (4.7 percent from -7.5 percent).
“Overall, the economic performance of Davao region [for 2022] was robust, and reflects in its solid economic fundamentals and strong resilience,” Lim said.
Outlook
FOR the rest of the year, NEDA-Davao forecasts a positive economic outlook for the current year, as there are ongoing talks involving “big-ticket infrastructure projects” in the region.
“Of course, coming from an 8.1 percent growth in 2022, we expect that we can sustain or maintain the momentum,” Neda-Davao chief economic development specialist Rosendo Aya-ay said.
“These [potential] projects are giving multi-million investments,” Aya-ay added.
Aya-ay said the potential comeback of the tourism industry, steady growth of the construction sector, and a stable agricultural sector should be indicators of sustainable growth.
Ayaay also said the insurgency-free status should positively influence the region’s economy in 2023.
“We can say that for the rest of the year 2023 we will be able to make our target 7.4 to 8.4 percent GRDP growth,” Aya-ay said.