Marcos happy with 7.6% GDP, but inflation still a problem

PRESIDENT Ferdinand “Bongbong” Marcos Jr. is happy the country's economy grew by 7.6 percent last year, but is still wary about the impact of rising inflation.

“We are happy to receive the news that our growth rate for the year 2022 exceeded all expectations even by the estimates of the international financing institutions, and we are holding at 7.6 percent,” the President said in a video message released by the Presidential Communications Office (PCO) on Friday.

But while he welcomes the positive news, Marcos said inflation still affects “certain sectors of society and of the economy who have yet to enjoy the benefits of that growth.”

He said he and his economic team will work harder to cushion the public from the impact of high inflation.

The President said inflation, which is expected to particularly affect agricultural products, is expected to ease “by the second quarter.”

It could even go down to 4 percent by the third or fourth quarter of this year, as forecast by the Bangko Sentral ng Pilipinas (BSP), he said.

“We must maintain, however, that growth rate and that is why it has become so important for us to go out and to attract investment into the Philippines because that is the only way for economic activity to increase and therefore to grow the economy,” the President said.

The Philippine Statistics Authority (PSA) has reported that the country posted a 7.6 percent full-year growth in 2022, the highest in 46 years.

The Gross Domestic Product (GDP) was up by 8.8 percent in 1976.

The 7.2-percent GDP in the fourth quarter of 2022 helped push annual growth to a 7.6 percent, the PSA said.

Among the key drivers were wholesale and retail trade, repair of motor vehicles and motorcycles, financial and insurance activities, and manufacturing.

Marcos previously reported that the country now belongs to the elite “VIP” — Vietnam, Indonesia, Philippines — Club in the Southeast Asian region because of the Philippine Development Plan (PDP), his administration's 8-Point Socioeconomic Agenda, and “various other policies and legislations that spotlight the economic reforms of the Philippines that have led to our sustained growth.”

The next step is to follow through with all the negotiations during his travels abroad, the most recent being the World Economic Forum (WEF) in Davos, Switzerland, to ensure the pledges translate to investments and revenue for the country.

On Friday, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the country's current “demographic sweet spot” will be a major factor in fueling the country's continued growth.

A demographic sweet spot is the period where the optimal number of a country's population is of working age and has few dependents.

Ricafort told a Malacañang briefing the Philippines is one of the last countries in the region to reach a demographic dividend since 2015.

Japan achieved it 50 years earlier, Singapore and Hong Kong in 1980, South Korea in 1985, China in 1980, and other Association of Southeast Asian Nations (Asean) countries earlier than the Philippines by 10 to 20 years, he said.

Majority of Filipinos are employed and can afford to buy houses, cars and appliances.

Once they start a family, their children would also have spending power, Ricafort said.

Countries that have reached the demographic sweet spot experience strong economic growth of 6 to 7 percent over the next 10 or so years, he said.

The country's population of 110 million is the 12th largest in the world. It is also younger than that of developed countries, and that is a big plus, Ricafort said.

He attributed the higher-than-projected fourth-quarter GDP to the further easing of Covid-19 restrictions, which spurred market movements.

He said the country is in the “right direction” when it comes to charting its economic course.

The growth will be sustained if the younger generation becomes more productive members of the workforce, he said.

The President earlier said the government is focusing on the “upskilling and reskilling” of the workforce to strengthen its advantage.