Philippine economic growth in 2022 was remarkable but uncertainties in the global economy remain potential threats.
"In a world characterized by pandemic, war, global uncertainty, high commodity prices, high inflation, and rising interest rates, the 7.6-percent growth posted by the Philippines last year is remarkable," said World Bank Country Director Ndiame Diop during the The Manila Times forum titled "Maintaining Momentum, Gearing for Growth on Feb. 28, 2023.
He added that in Southeast Asia, only Malaysia outpaced the Philippines in economic growth last year.
"Malaysia was No. 1 but if you look at the drivers of growth in Malaysia, a lot had to be discussed," the WB official said.
Lobien Realty Group Inc. Chief Executive Officer Sheila Lobien agreed that energy was a primary stumbling block, saying that 'the cost of electricity is one of the biggest concerns here in the Philippines,' and is one reason why investors are hesitant.
'Please make it easier for us to do business so that we can surpass the 6 percent [growth goal] so that we can go to 8 or 9 percent,' Eduardo Francisco, BDO Capital and Investment Corp. president, said.
Anna Lu, Aboitiz Infracapital Inc. water business head and Apo Agua Infrastructura Inc. president, said that the water sector had been 'largely neglected' but added that ongoing initiatives could 'make it easier for the people at the water sector to do business.' Digital Innov President and CEO Milo Sandig discussed on how digital industry in the country continued to flourish despite the many challenges of internet issues.
However, he warned of uncertainty in the global economy, citing two factors that can send the economies into possible recession. These are the trajectory of monetary policy in the United States, and global energy prices.
He cited that China's reopening of its economy will be the biggest factor in energy prices.
"China is 1/3 of global demand of energy, and 55 percent of the metal price market," Diop said, adding this could lead to increase in fuel and food prices, among others.
Going, forward Diop the IMF is "quite optimistic" on the country's economic growth but sees the projected 6.3-percent increase in the country's gross domestic product (GDP) this year as challenging.
He added that the projected economic growth for the Philippines this year would face challenges from monetary policy tightening that will affect consumption and investment, and negate what the government is pushing to propel growth like more infrastructure spending.
Also, Diop said it is also important to link more people to economic growth. "It is very important to really, really to support those who are struggling," Diop said.
He cited the importance of income transfers to the poor, and assuring these reach them.
Remaining optimistic
For his part, Kelly Bird, Country Director for the Philippines of the Asian Development Bank, said Philippine economic growth is expected to be close to its potential over the medium term, or 6 percent in 2023 and 6.3 percent in 2024.
"It will remain solid, we are projecting economic growth of 6 percent this year, coming off a very good year in 2022," he said.
He cited the following factors that could fuel economic growth this year: acceleration in public infrastructure investment; employment recovery; pick up in remittances; recovery in tourism, retail trade, services and exports; and solid manufacturing expansion driven by domestic demand.
Bird also cited factors that can affect Philippine economic growth: inflation stickiness; higher interest rates in 2023 start to slow private investment; sharper than expected global growth slowdown; and Russian invasion of Ukraine.
For 2023, he said that "the economy is in its expansion phase."
"Clearly, it is going to be based, as I have mentioned earlier, rising employment numbers, and a pick up in remittances, tourism's recovery," Bird said.
"What's going to be key for growth will be sustaining infrastructure spending above 5 percent (of GDP) this year," he added.
