2022 is a banner year of economic recovery, with the Philippines managing to sustain positive growth amid increasing commodity prices. Latest fiscal reports say that private consumption expenditures have already surpassed pre-pandemic levels and continue to grow as the economy further opens and the government applies a calibrated approach to virus control.
In his first State of the Nation Address, President Ferdinand Marcos Jr. announced that no more lockdowns will be implemented -- a policy hailed by the majority of the population especially the business community. This is what they need, especially the MSMEs, to recover from the impact of the pandemic. To recall, the severe lockdowns implemented by the previous administration during the early part of the pandemic caused an economic contraction resulting in job losses and lower business activities.
Manila-based international lender Asian Development Bank (ADB) is expecting the Philippine economy to grow by 6.5 percent this year, a revision from its earlier projection of 6.0 percent. According to ADB, the country’s growth will be supported by a strong domestic demand, pick-up in employment rate, remittance inflows, private investment expansion, and large public infrastructure projects.
Moreover, ADB projects that the government’s continued vaccination efforts will heavily support recovery, especially since a huge percentage of those inoculated constitute the Philippine workforce. Companies sending employees back to work will thus translate in higher consumer spending and boost businesses and employment.
There is also an evident uptick on the Philippine stock market as a testament to the PH’s economic recovery. From falling to as low as 4,000 level since the global pandemic emerged, the benchmark Philippine Stock Exchange index (PSEi) -- the main index tracking the performance of the top 30 companies on the stock market -- managed to gain ground this year to hit the 7,000 level. As much as double digit growths were also seen in the net income performance of the publicly listed companies during the first half of the year.
The country remains challenged by global macroeconomic factors such as weaker peso and increasing global crude oil prices caused by the ongoing tensions between Ukraine and Russia, but with the government’s efforts to temper inflation, the movement of goods and commodities in the Philippines remained mildly affected.
In July this year, headline inflation rate rose to 6.4 percent, a much slower growth as compared with the United Kingdom, which was at 10.1 percent -- its highest level in 40 years -- as well as the Netherlands and Spain, countries with inflation rate growing to a 38-year high of 10.3 percent.
Within the region, the Philippines’ inflation rate remained behind Singapore and Thailand which were at 7.0 and 7.6 percent, respectively, and were at a 14-year high.
Mid last month, the Bangko Sentral ng Pilipinas (BSP) took sensible action to temper further inflation, having raised rates by 50 basis points (bps), and by 75 bps last July.
Transition to digital economy
The country has seen evident growth of e-commerce and the digital economy during the pandemic, as Filipinos turn to a safer and more convenient methods of purchasing goods, it was imperative for businesses to integrate digitalization in their operations. E-commerce companies and platforms enabled the consumer market to thrive despite strict lockdowns.
Forecasts show that this expansion is set to continue. Data from Insider Intelligence released last June 2022 showed that the Philippines’ sales growth from e-commerce increased by 25.9 percent, next to Indonesia with 34 percent, and Singapore being the highest at 36 percent. PH now stands third among the top 10 countries with exponential sales from e-commerce.
Report from an international think tank Mordor Intelligence shows that this industry is expected to grow 11.4 percent between now until 2027 and has high potential for expansion driven by Filipino consumers now adapting to a more digital way of life. Coupled with the continued economic growth, the Philippines is a major focus for digital transformation.
The report further states that many industries can take advantage of the development of the Philippine e-commerce, including telco (data boom), logistics and warehousing (supply chain), and social media. Similarly, business in retail that will innovate businesses will benefit from E-commerce rise.
This in turn will undoubtedly become an economic multiplier, as it enables improved market access and expansion. The Marcos administration recognizes this and has issued a marching order to the Department of Information and Communications Technology (DICT): “We need to digitalize the Philippines."
The DICT already has concrete plans in place to address this, including working with legislators to introduce amendments that will free up and make bureaucracy more conducive to technology-enabled governance and to a technology-enabled economy. DICT is also set to push for the National Broadband Plan (NBP) to provide the government with its own “digital backbone” not only to improve its service but security as well. Likewise, the agency is prioritizing the connectivity of remote communities, and programs for micro, small and medium enterprises (MSMEs).
Supported by private sector efforts aimed at fostering an environment for innovations, and a workforce of the future that is also technologically enabled, a digital Philippines is definitely achievable- a must for steady economic progress in the years to come.
Editor’s note: The opinions expressed in the foregoing article are solely the author’s and do not reflect the opinions and beliefs of the Philippine News Agency (PNA) or any other office under the Office of the Press Secretary.