National Economic and Development Authority (NEDA) Secretary Arsenio Balicasan on Thursday announced the Philippines’ gross domestic product (GDP) has grown by 6.4 percent in the first quarter of 2023.
In his statement during the Philippine Economic Performance for the First Quarter of 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 this year.
“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%), China (4.5%), and Vietnam (3.3%). The country’s growth is also more rapid than the forecasted first quarter growth rates for Malaysia (4.9%), India (4.6%), and Thailand (2.8%),” Balicasan added, quoting the data from the Philippine Statistics Authority.
Balisacan added that while this quarter’s growth figure is lower than the 8.0 percent year-on-year growth rate recorded in the first quarter of 2022, the government needs “to exercise caution in interpreting this as a slowdown since the previous year’s growth came from a low base.”
“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,” the NEDA chief pointed out.
On the demand side, Balicasan said the gross fixed capital formation or investment expanded at a rapid pace of 10.4 percent year-on-year, faster than household final consumption expenditure (6.3%) and government final consumption expenditure (6.2%).
This 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,” Balicasan said.
“However, 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,” he added.
On the supply side, Balisacan said all major economic sectors–Agriculture ( 2.2%), Industry (3.9%), and Services (8.4%) — 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.
“We have experienced El Niño before and are confident that with adequate planning and preparation, we can successfully navigate it again this year,” he said.
Balisacan also pointed out 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.
“Recall also that the sectors of transportation and storage; accommodation and food service activities; wholesale and retail trade; and construction are among those with the highest year-on-year increases in employment in March 2023, indicating that strong pent-up demand persisted in the first quarter of this year,” Balicasan said.
“Despite this rather auspicious beginning for 2023, we, in the Economic Team and the whole government, have to remain vigilant. While we remain focused on implementing our social and economic transformation agenda, we also stand ready to respond to the shocks and risks to our growth outlook – both domestic and external, foreseen and unforeseen,” he added.
Balicasan admitted the high inflation 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.
“But the improvement in the business climate can counter this unintended effect,” he said.
The NEDA chief said the headline inflation rate appears to have reached its highest point, decelerating to 6.6 percent in April 2023 from 7.6 percent in March and 8.6 percent in February 2023.
“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.
As means to develop and protect Filipinos’ capabilities and enhance the prospects for sustained growth, Balicasan said it is crucial to address the rising costs of food and energy, especially since these disproportionately adversely affect the welfare of low-income and vulnerable individuals, as food items tend to dominate their consumption patterns.
“Through the recently approved Inter-Agency Committee on Inflation and Market Outlook, we endeavor to promptly anticipate food and energy market conditions and generate evidence-based and timely recommendations to the President and the Cabinet, especially in light of the looming threat of El Niño on our food and energy supplies. Our policy prescriptions shall be a balancing act, considering the overall impact on different sectors of the economy, including local producers and consumers,” Balisacan said.
“Despite various risks and challenges, the economic outlook for the Philippines in the near and medium term remains solid. We are confident that we will reach our target for this year of 6.0 to 7.0 percent growth rate and 6.5 to 8.0 percent for 2024 to 2028,” he added. (PND)
