Like all other countries, the Philippine economy reeled from the impacts of the Covid-19 pandemic.
Remittances from its overseas workers dropped, and extended lockdowns have stifled economic growth by 9.5% in 2020 (‘Dutertenomics’: President, 2022).
As the country eased its lockdowns and started reopening, the economy rebounded with projections of annual GDP growth this year of 8.3% (Philippines’ economic recovery, 2022).
And with an even optimistic forecast of GDP growth of up to 9% from the Federation of Filipino Chinese Chamber of Commerce & Industry, Inc. (FFCCCII bullish, 2022).
The remittances of Filipinos working aboard, dubbed “modern-day heroes,” are a lifeline to the Philippine economy, which has experienced its worst post-war recession in 2020. Overseas remittances account for nearly 9% of the country’s GDP.
In 2020, the Overseas Filipino Workers (OFW) remitted $29.9 billion, a slight contraction as covid ravaged economies. The following year, remittances grew to $31.4 billion, providing solid support to the country’s economic recovery (Venson, 2022).
Philippine’s economic (2022) says:
As lockdown eased and businesses gradually opened, the country’s economy experienced a robust recovery owing to the following factors – the country’s healthcare system proved capable of managing the spread of the Omicron variant with the government’s shift to treating the coronavirus as an endemic disease, the steady year on year growth of private consumption – more than 70% of economic growth relates to domestic consumption activities.
However, experts warn that the rising inflation, the ongoing war in Ukraine, and higher oil prices could slow down this momentum. Rajiv Biswas, S&P Global Market Intelligence chief economist for Asia-Pacific, says the country could bank on the domestic front.
Domestic tourism in the Philippines contributes 12.7% to its GDP, while increases in consumer spending and infrastructure investments, and OFW remittances will help strengthen the economic recovery.
The Philippine economy was performing well before the pandemic
Dr. Cielo Magno, associate professor of the University of the Philippines School of Economics (UPSE), told CNN, “Prior to the pandemic, our GDP growth rate was at 6.1%. We were among the highest in terms of growth rate in Southeast Asia. Prior to the pandemic, poverty incidence was also declining.”
Poverty rates were declining, and the country was on its way to reaching upper-middle-income economic status.
At the height of the pandemic in 2020, around 7.26 million Filipinos were also out of work resulting in a record unemployment rate of 17.6 percent.
To buffer the impacts of the pandemic, especially among the poorest of the Filipinos, former president Duterte signed two multi-billion stimulus bills for the pandemic response funds.
Looking into the next few years, some of the country’s top officials expressed optimism about the country’s future growth potential.
Former Philippine Department of Finance chief, Carlos Dominguez III, says, “The next administration will inherit many hard-won reforms. They will assume the office with the basic groundwork for rapid and inclusive growth already in place. President Duterte’s final legacy is a confident and hopeful Filipino people earnestly looking to a future of sustained progress”.
BDO chief market strategist Jonathan Ravelas agrees with the former DOF chief’s assessment noting that the former administration is leaving behind an economy with the potential to achieve the revised 7-8% economic growth target, the article says.
The Philippines’ most valuable resource
Simon Baptist, the Chief Economist at the Economist Intelligence Unit, writes in the EIU’s 24 June 2022 newsletter, “the most valuable resource in the Philippines right now is its people. Amid the pandemic, many companies have realized that many functions can be done anywhere. In the Philippines, they find a young and growing workforce with good language skills at globally affordable prices. The gleaming towers in Manila’s business districts are heaving with financial analysts, human resources, call centers, and more. In a world where it is hard to find people to fill jobs, the jobs are migrating to where the people are.”
The Federation of Filipino Chinese Chambers of Commerce & Industry, Inc. (FFCCCII) mirrors this assessment and expresses optimism regarding the country’s robust and speedy economic growth.
FFCCCII bullish (2022) released a statement laying out the twelve reasons for its “bullish” forecast, which are:
- It cited the country’s human resource as its “most valuable and important natural resource.”
- Adding that a “strong commitment to improving education quality and opportunities shall help unleash the great potentials of the Philippine economy, boosting and maximizing our demographic sweet spot or comparative economic advantage of having young people as the majority of the Filipino national population.”
- the new administration’s appointment of highly-competent key cabinet officials;
- steady reopening of the Philippine economy;
- smooth and orderly 2022 Presidential election;
- sound monetary and fiscal policies of the Duterte administration;
- the Build, Build, Build infrastructure projects which the incoming administration vowed to continue;
- plans by the new administration to strengthen the agriculture and aquaculture sector;
- continuous assistance to micro, small and medium-scale enterprises (MSMEs);
- and the ratification free-trade agreement between 10 ASEAN countries.
The Philippine government has also started implementing Infrastructure Asset Management across government agencies which will assist them in managing their existing assets, building resilience to natural calamities, and driving growth (Implementation of a Philippine, 2020).
Manuel, P. (2022 June 28). ‘Dutertenomics’: President Rodrigo Duterte and the Philippine economy. CNN Philippines. Retrieved from https://www.cnnphilippines.com/business/2022/6/28/President-Rodrigo-Duterte-economy-wrap-end-of-term.html
FFCCCII bullish on Philippine economic growth of 7% to 9%, praises new economic managers. (2022 June 10). Business World. Retrieve from https://www.bworldonline.com/special-features/2022/06/10/454134/ffcccii-bullish-on-philippine-economic-growth-of-7-to-9-praises-new-economic-managers/
Venson, C. (2022 February 15). Philippines’ modern-day heroes’ sent record remittances last year. Nikkei Asia. Retrieved from https://asia.nikkei.com/Economy/Philippines-modern-day-heroes-sent-record-remittances-last-year
Debt-to-GDP widens to 63.5%. (2022 March 13). Malaya Business Insight. Retrieved from https://malaya.com.ph/news_business/debt-to-gdp-widens-to-63-5/
Simeon, L. (2022 June 27). Economic recovery momentum at risk from elevated inflation. Phil Star. Retrieved from https://www.philstar.com/business/2022/06/27/2191093/economic-recovery-momentum-risk-elevated-inflation
Philippines’ economic recovery remains strong. (2022 June 22). Economist Intelligence Unit. Retrieved from https://www.eiu.com/n/philippines-economic-recovery-remains-strong/
Implementation of a Philippine Government Aset Management Policy (PGAMP). (2020, September 24). Department of Finance, Department of Budget and Management, National Economic and Development Authority Joint Memorandum Circular No. 2020. Retrieved from https://law.upd.edu.ph/wp-content/uploads/2020/12/DOF-DBM-NEDA-Joint-Memorandum-Circular-No-2020-1.pdf
PHOTO CREDIT: “View from Grand Hyatt Manila overlooking Bonifacio Global City and Makati skylines at sunset” by Mickeyeva – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=89561115