Bongbong will be tested on the economy in 2023

January 21, 2023

by Sonny Africa

It’s curious if whoever audience Pres. Ferdinand “Bongbong” Marcos Jr gets at the World Economic Forum (WEF) will believe his bullish claims about the country’s economic prospects in 2023. Anyone paying attention to the Philippines must already know about the Marcos family’s social media ecosystem for political lies and may wonder if successfully taking the presidency would have led to an epiphany to stand for truth over fictions.

In any case, facts show that last year was a tough one for poor and middle-class Filipinos – and by extension for the economy, for who else should the economy be for than the majority of Filipinos.


The economic troubles are despite how the economy is a major theme of the Marcos Jr administration. He promised a “comprehensive all-inclusive plan for economic transformation” at his inaugural speech, spent most of his first state of the nation address feigning expertise on economic issues, and after each trip abroad always insists that he is bringing home billions of pesos in investments. We’ll soon see how he spins the latest junket to the WEF.

His economic team was also hyped as some kind of dream team for their expertise and experience. Like Marcos Jr’s vlogs, they project sunshine and closed last year with a statement promising that “the best is yet to come.” At a sparsely attended breakfast briefing at the WEF the other day, they claimed that “our economy is resilient, agile, and primed for new heights.”

It isn’t. The administration barely muddled through its first six months with the dubious Maharlika fund being the only original policy measure announced. Food prices have been soaring – driving hunger and poverty – yet the agriculture department the president helms struggled to articulate the problem and come up with solutions.

The empty cheer of performative Bongbonomics will come up against eight (8) harsh realities in 2023:

1. Growth will slow – Marcos Jr sees 7% growth for the economy this year which is at the high end of the Development Budget Coordination Committee’s (DBCC) latest estimate of between 6-7% growth in gross domestic product (GDP). Perhaps less inclined to spurious sunshine, the Asia Development Bank (ADB) forecasts a lower 6% and the World Bank (WB) an even lower 5.4% for the year.

The economic managers have failed to meet their growth targets for five years now with only eleventh-hour estimates coming anywhere close. If their usual overestimates are any guide – and generously ignoring how wildly unmet growth was in 2020 – it is more likely that growth this year will be around 5% or even less.

The relatively rapid growth last year is a misleading indicator of the economy’s trajectory. This was just a rebound from reopening and there was a statistical boost from being measured against the low base of an economy pressed down by lockdowns. This rebound is however already completely spent.

The real trajectory of the economy was emerging before the pandemic when growth constantly dropped from 7.1% in 2016 to 6.9% (2017), 6.3% (2018), and 6.1% (2019). This was despite rapidly rising infrastructure spending – Build, Build, Build didn’t spur growth then and Build, Better, More won’t now.

The irrationally long and harsh lockdowns only depressed the trajectory even more. After the catastrophic 9.5% contraction in 2020, it took nearly two years for economic output to even just return to its level in 2019.

Growth this year will be inhibited by scarring that includes weaker household incomes, depressed spending and consumption, and widespread small enterprise closures. There are also a few more factors inhibiting growth.

The Eurozone and United Kingdom (UK) are widely expected to go into recession this year while the United States (US), China and Japan will at least slow if not also enter shallow recessions.

These countries account for around two-thirds (66%) of the country’s exports, over one-third of foreign investment inflows (35%), and nearly two-thirds of overseas remittances (65%). They are also final sources of demand for many goods exported from Southeast Asia which means additional indirect dampening effects from Philippine economic relations within the region.

The government is also straitjacketed by its narrow-minded concern for credit ratings and so-called fiscal consolidation. This year is the first of at least five years of austerity and the 4.9% increase in the 2023 national government budget doesn’t even keep up with the 5.8% inflation last year. This means that public spending is falling in real (inflation-adjusted) terms just when it should go up to boost aggregate demand, improve household welfare, and strengthen a supply response from micro, small and medium enterprises (MSMEs).

And then there’s how the government plans to keep raising interest rates. Key policy interest rates have been hiked substantially from 2.5% at the start of 2022 to 5.5% already. The approach to lower aggregate demand to lessen mainly supply-side inflationary pressures unnecessarily represses economic activity, livelihoods and household incomes.

2. Joblessness and informality will worsen – The economy was scarcely creating sufficient decent work when growth was hyped as rapid. This was the case in the first few years of the Duterte administration which saw the worst average annual job creation in 3 ½ decades but also even in 2022 as the economy reopened.

This was a serious problem in 2019 even before the pandemic with IBON estimating that 29.3 million or 69.9% of total employment then was just informal work. These were the 16.8 million openly informal – i.e., domestics, family farms and business, and self-employed – and around 12.6 million in precarious work in unregistered establishments.

Because of the lockdowns, this figure rose to 32.8 million informal workers or 71.6% of total employment in 2022. Taken together with the 2.6 million officially reported as unemployed last year, a huge three-fourths (73.2%) of the labor force are either jobless or in merely informal work. The country is struggling to create stable and productive employment.

It is difficult to imagine how even weaker economic activity in 2023 could possibly be conditions for creating more formal employment, more regular work, and better incomes and earnings.

The growth slowdown will underscore the structural inability of the economy to create enough productive employment – and make more people poorer, hungrier and discontented.

3. Onions cheaper and inflation slower, but prices still high and rising – Inflation hitting 8.1% in December 2022 brought the average for the year to a 14-year high of 5.8% although this is projected to moderate to between 2.5-4.5% this year.

Even if the middle estimate of 3.5% is achieved this would still be higher than the 3% average in the decade 2010-2019 before the pandemic. However, inflation moderating only means that the general price level will be increasing at a slower rate and not that the prices of all basic goods and services will fall.

This is even if the price of specific commodities such as onions falls following the harvest season and pressure on monopolistic traders to lower prices. Imports may or may not lower prices, depending on the price at which these are brought to market, but importation is in any case an emergency measure at best and will be damaging over the longer term.

4. Corruption will worsen – The shadow of the Marcos kleptocracy is long and makes it awkward for the new administration to even just posture as being anti-corruption. In any case, there are already early signs of much more corruption in 2023 and the years to come.

The latest development in the Maharlika sovereign wealth fund-cum-investment fund saga is that it has been “reengineered” to remove questionable government fund sources, made more “private-led,” and is no longer a government-owned and controlled corporation (GOCC). It will be a little more time before it becomes clear whether this is a genuine evolution of the fund, a face-saving retreat, or just a diversionary tactic. The brazenness of its original opaqueness with public funds and the unusual personal insistence by the president himself were portentous red flags that won’t easily be forgotten.

In any case, there is still massive old school pork barrel in the 2023 budget under the president’s direct control to be wielded over legislators, local governments and other officials in the bureaucracy. The confidential and intelligence funds of the president (Php2.3 billion) and vice-president (Php650 million) are flagrant but still only a portion.

For instance, the Php807 billion in ambiguous and opaque unprogrammed funds in 2023 is the largest in the country’s history. It is over three times larger than the Php251 billion last year, and five times the average Php164 billion over 2017-2022.

There’s at least Php548.9 billion in lump sums for various infrastructure programs and projects, aside from at least Php52.2 billion for unidentified social programs. The public infrastructure budget overall is already at least Php1.2 trillion worth of well-known opportunities for kickbacks, overpricing and other shady deals.

5. Social services and social protection scarcer, worsening infrastructure privatization – Public resources will keep getting misprioritized. Disproportionate amounts will go to supporting private profits away from directly improving the people’s welfare.

Millions of Filipino families remain distressed but important emergency assistance programs created during the pandemic have been discontinued. The high of Php233.7 billion worth of cash support in 2020 fell to Php9.5 billion in 2022 and is down to a trifling Php510.5 million this year.

However, regular emergency assistance programs have also been cut and are down from Php97.4 billion in 2022 to Php90 billion this year, or a Php7.5 billion budget cut. This included billions slashed from the budgets for families in difficult circumstances (Department of Social Welfare and Development), displaced workers (Department of Labor and Employment), and overseas workers (Overseas Workers Welfare Administration).

The Marcos Jr administration even cut the budgets of the Pantawid Pamilyang Pilipino Program (4Ps) by Php5.1 billion (falling to Php102.6 billion) and of the KALAHI-CIDSS community development program by Php2.8 billion (down to Php6.7 billion).

The pork barrel-rich infrastructure program on the other hand increases to at least Php1.2 trillion. This is aside from how amendments last year to the implementing rules of the Build-Operate-Transfer (BOT) law, which make public-private partnerships even more profit-friendly at the expense of the public interest and regulation, will gain traction this year.

These amendments include, among others: ensuring reimbursement for regulatory acts by any branch of government that reduce corporate profits; making regulators subject to arbitration; allowing direct government subsidies through “availability payments” or “viability gap funding”; simplifying evaluation and approval processes; and looser equity requirements for proponents.

6. Climate action will be all talk – The president has taken to expressing concern about climate change as among the ways to distinguish himself from his predecessor and ingratiate himself further with the international community.

Such concern for the environment is however not supported by key policy actions. The budget of the environment department is actually cut by Php2.2 billion and falls to Php23.3 billion in 2023 from last year. By classification, the government’s environmental protection budget is reduced by Php4 billion to Php20.9 billion.

Moreover, the administration has also declared its intent to promote mining more aggressively and, by IBON’s count, has at least 24,000 hectares worth of reclamation projects already approved or in the pipeline.

7. Debt and debt service will keep bloating, new taxes likely – National government borrowing and debt will rise by even more than projected as growth slows, revenue generation falters, and meaningful higher taxes on the rich are avoided.

National government debt already at Php13.6 trillion as of November 2022 is projected to grow to Php14.6 trillion by the end of this year. There will be well over Php2 trillion in gross borrowing but at least Php1.6 trillion of this will go straight to debt service – Php582 billion for interest payments and Php1 trillion for amortization.

The economic managers are disproportionately concerned about credit ratings and the dominant trait of its economic program is not recovery or development but “fiscal consolidation.” The result is counterproductive austerity just when spending on cash assistance, social services, and economic services is so urgent.

Yet the government does not have to borrow so much, can pull down its debt, and can spend more on the people with a more progressive tax system. This means a tax system where those with more income, wealth, and ability to pay are obliged to pay more than those who are less able.

The reason revenue generation is so meager is because the focus is on taxing poor and middle-class Filipinos who already have so little as it is – in particular, taxing their consumption. Even the recent proposal for a consumption tax on luxury goods misses the point and a direct tax on billionaire wealth is much more desirable.

The government knows the limits to increasing revenues through so-called improved tax administration and efficiency. The refusal to raise direct taxes on rich families, large corporations and wealth will however only mean that the poor and middle classes will keep being squeezed with indirect consumption taxes. Value-added tax (VAT) and oil excise taxes already bear down heavily but the administration is already considering new taxes on plastic bags and digital services.

8. Failing economic fundamentals dismissed or ignored – The last reality is not new but still alarming. Philippine agriculture is at its smallest share of the economy in its history and manufacturing since the late 1940s.

These unsound fundamentals are why joblessness and poverty remain so entrenched. They also ultimately explain why the Philippines has the highest inflation and second highest unemployment rate in Southeast Asia. As a percent of GDP, we have the biggest trade and budget deficits among the major economies of the region (Malaysia, Indonesia, Thailand, Singapore and Vietnam).

Most Filipinos are distressed and the critical domestic productive sectors – agriculture and industry – are in decline. Yet there is a striking lack of urgency among policymakers when it comes to tackling underdevelopment

The new Philippine Development Plan (PDP) 2023-2028 was released on December 31, 2022 – without fireworks but still grandiosely promising “deep economic and social transformation” and “steering the economy back on a high-growth path.”

There is unfortunately nothing new. It remains steeped in obsolete neoliberal ideas and recycles old policies. In not reimagining and setting new directions for the economy, ordinary Filipinos will continue to suffer the fallout of past policy failures and the economy will fail to navigate adverse global conditions this year.


Still, nothing is ever completely fixed. The government is still the single most powerful economic entity in the country with immense resources, machinery and regulatory powers. The problem is not that it is powerless but on what it is choosing to use its powers for.

The binding constraint to steadier progress and development is the outdated faith in market forces. The blindness to the state’s responsibility to intervene will mean worse times in 2023. It will also reopen lockdown wounds that were hidden by last year’s rebound but haven’t really healed yet.

The rebound from reopening last year was the easy part and it’s this year that Marcos Jr and his economic team will really be tested. Hopefully the president will do better than when he failed his economics exam during his university days.