Research group IBON said that faster growth in the gross domestic product (GDP) in 2022 won’t be repeated and pointed out that ordinary Filipinos did not feel this amid increasing informality in employment and poverty. The group said that the relatively rapid growth in 2022 is only a rebound after the protracted pandemic lockdowns and there will be a steep slowdown this year.
The Philippine Statistics Authority reported 7.2% growth in the fourth quarter of 2022 which resulted in 7.6% full-year growth in 2022. This is above the government’s target of 6.5-7.5% for the year.
IBON said however that the government is misleading the public about the growth and overdoing it by ascribing it to the president’s “good economic stewardship.” The 7.6% full-year growth is only because the economy was finally fully reopened after the over-long and excessively harsh lockdowns, said the group. It is only the economy returning to where it was three years ago in 2019 which means that, despite hyped growth, there are still three lost years of economic output.
The fast growth will not be sustained as the rebound effect from the record 9.5% contraction in 2020 has been exhausted, said the group. The economy will start slowing and return to its real trajectory of slowing growth prior to the pandemic. From 7.1% in 2016, growth dropped to 6.9% (2017), 6.3% (2018), and 6.1% (2019). This was despite big infrastructure spending under the previous administration’s Build, Build, Build and which the current administration is trying to continue with Build, Better, More.
IBON pointed out that the slowdown already started in the fourth quarter whose 7.2% growth rate is the slowest for the year. The momentary so-called revenge spending of higher income groups from the reopening at the start of 2022 resulted in 10% growth in household final consumption expenditure in the first quarter. But since then, this has been steeply slowing in the second (8.6%), third (8%) and fourth (7%) quarters as high inflation and poor earnings of poor and low-income households bear down on spending. Clearly, there was no holiday spending growth spurt.
Despite hyped rapid growth, the number of poor families reportedly increased by 700,000 since June 2022 when Pres. Bongbong Marcos Jr took office to reach 12.9 million in December, according to the self-rated poverty surveys of private group Social Weather Station (SWS). This is over half (51%) of all families and is aside from the 7.8 million (31%) more who are at the brink of poverty or borderline poor.
The lackluster performance of the country’s production sectors is another sign that rapid growth will not be sustained. The agriculture, forestry and fishing sector barely registered a 0.5% growth from the 0.3% contraction in 2021 and has yet to match the already low 1.2% growth in pre-pandemic 2019. Meanwhile, manufacturing growth slowed to 5% in 2022 from its 8.8% rebound growth in 2021.
IBON stressed that the economy cannot be said to be recovering because it is not creating sufficient decent employment despite so-called robust growth. Millions of Filipinos, especially the poor and vulnerable are still struggling with worsening job informality and poverty.
The long-standing problem of informal employment worsened after the protracted pandemic lockdowns. IBON estimated that 29.3 million or 69.9% of total employment was just in informal work in 2019. This is comprised of the 16.8 million openly informal – i.e., self-employed, domestic workers, and those in family-owned farms and businesses – and around 12.6 million in irregular work in unregistered establishments.
After the lockdowns, this bloated to 32.8 million informal workers or 71.6% of total employment in 2022. Added with the 2.6 million officially reported as unemployed, this means a huge three-fourths (73.2%) of the labor force are either jobless or informal workers.
Since the start of the Marcos Jr government, eight out of ten (79.3%) jobs created have been in merely part-time work. IBON estimates that some 36.7 million or three-fourths (74%) of those reported as employed are struggling in informal work.
IBON said that the Marcos Jr administration’s austerity measures euphemistically called “fiscal consolidation” are counterproductive and will only steer the already flailing Philippine economy into even rockier waters. The group said that the government should channel its immense resources towards urgent measures like substantial ayuda, wage hikes and subsidies and support for small businesses and producers to genuinely boost economic growth that can benefit the many. ###