The Russia-Ukraine war and surging prices are not slowing down Philippine economic growth despite some doomsayers in our midst.
The economy expanded 7.6 percent in the third quarter of 2022, beating expectations by some market analysts. The growth is the first registered under the administration of President Ferdinand Marcos Jr., and judging from other key economic indicators that came out last week, the Philippine economy is poised to expand further in the last quarter and weather the external headwinds coming our way.
Household spending was one of the major drivers of the third-quarter growth, expanding a robust 8 percent. More Filipinos were spending on restaurants, malls and hotels, and visiting the countryside. Less border restrictions and more simplified travel rules enabled more of our countrymen to visit the provinces and tourist destinations. Face-to-face schooling resumed. In sum, most Filipino families are returning to their pre-pandemic life.
Of note is the declining daily Covid-19 cases in the country and the increased mobility that has emboldened the population to go out and resume their interrupted way of life.
The strong third-quarter growth is a credit to President Marcos, his Cabinet and, of course, the resilience of the Filipinos amid the health crisis and the high inflation rate. The Philippines recorded the highest economic growth in Asia, next only to Vietnam’s 13.7 percent and above Indonesia’s 5.7 percent. The Philippine economy is, thus, on track to realize the government’s growth target of 6.5 percent to 7.5 percent for 2022.
President Marcos did not tinker with the previous administration’s economic policies. On the contrary, he is trying to improve the business climate and make it friendlier to investors. His administration has been vocal and aggressive in wooing foreign investors. The present administration is clear on its intent to invite foreign businessmen by offering several big infrastructure projects to the private sector and listening to their concerns.
I will leave the job of dissecting and interpreting the rest of the third-quarter gross domestic product data to the private economists and market analysts. But the economic expansion that we saw in the third quarter of 2022 is more than proof that the Philippines has more room to grow despite the recessionary trend in the developed economies of the US and Europe.
One telling data released by the government also last week was the reduced unemployment rate in September that will translate into more personal consumption and investment in the Philippines in the fourth quarter and beyond.
The unemployment rate in the Philippines significantly dropped to 5 percent in September from 8.9 percent in the same period last year. This rate is the lowest since January 2020 when the pandemic was about to start and an improvement from 5.3 percent in August and 8.9 percent a year ago. The rate, per the report of the Philippine Statistics Authority, was also the lowest since the 4.5 percent in October 2019.
The data means 47.58 million Filipinos were employed in September, higher than the 43.59 million a year ago. With the resumption of economic activities, an additional 2.2 million Filipinos joined the workforce, raising the country’s labor force participation rate to 65.2 percent in September from 63.3 percent in the same month last year. Less mobility restrictions are giving way to increased employment.
President Marcos naturally welcomed the lower unemployment figures. The President summed it up: “This is a good sign. The economy is trying very hard to grow. We just have to be able to tolerate the shocks that are coming from abroad. But otherwise, the economy is moving in the right direction.”
The Philippines, by all indications, is withstanding adverse market forces. The nation’s gross international reserves bounced back to $94.1 billion as of end-October from $93 billion in September to snap a seven-month slump, after the Bangko Sentral ng Pilipinas defended the peso against speculators.
The peso, too, is regaining its strength, clawing back to the 57-to-the-dollar territory last week.
The optimist in me again tells me that the Philippine economy will expand robustly in the coming quarter. The resumption of face-to-face classes, fewer mobility restrictions, declining Covid-19 cases and the rising employment rate, among others, are getting us closer and closer to our pre-pandemic way of life.