MANILA - GDP growth in the fourth quarter of last year will again be high, but growth will be slower in 2023, independent think tank IBON Foundation said on Wednesday.
“Even if we see it in the 7-7.5 percent or more growth for 2022, there will be a slowdown in 2023,” said IBON Executive Director Sonny Africa.
As the Philippine Statistics Authority prepares to announce the preliminary GDP growth figures for the last quarter, Africa also said the expected high growth “will only be high because it is coming from the reopening of the economy and the base effect.”
Africa added the growth will not be sustained because job creation last year, he said, was below par.
“Although the government claims a 6.5 middle of the estimate, we think that based on their track record of the last 5 years of overestimating, again on that crude measure, the real growth will probably be just around 5 percent,” he said.
Rapid growth last year did not create jobs, while informality worsened, household savings dropped, poverty increased, he explained.
Philippine economic managers have touted the local job market as a key strength in meetings with prospective investors in Davos, Switzerland during the World Economic Forum, and in Frankfurt, Germany during the Philippine Economic Briefings -- all designed to showcase the Philippines as an investment destination.
The official employment, labor force participation, and unemployment figures hit their best levels since 2005 last November. However, underemployment has been elevated and volatile, and NEDA Secretary Arsenio Balisacan has also admitted there is a need to improve the quality of jobs being created.
Africa argued that many of the jobs created last year were in the informal sector, where income levels are much more erratic and employees often enjoy no benefits. He added that poverty incidence has been increasing - a sign, he said, that the job market and the economy are not as healthy as the numbers suggest.
“Growth as a headline indicator of development, there is a problem with that, we should look more at social indicators. Do people have enough money for their basic needs? Are prices actually stabilizing? Do they have savings for emergencies?" he asked.
IBON proposes more social amelioration.
"Right now there are short term and long term solutions. I think the short term solution is to put money in people’s pockets so they spend more in their communities, spur local community work, spur MSMEs. At the same time there should be support for MSMEs not cut as they are cut now in the 2023 budget. If there is no fiscal stimulus on the demand side and the supply side, we will see slower growth, we will see depressed demand, we will see lower revenues, we will see higher debt."
Government, however, is moving toward fiscal consolidation, as it tries to whittle down debt and deficits accumulated due to pandemic spending.
Africa said fiscal consolidation is the same as ‘austerity’ and will result in slower growth.
He added that the Philippine Development Plan 2023-2028, released to the public at the start of the year and to be discussed in an open forum on January 30th, lacks ambition. He said the plan said all the right things and tackles all of the right issues, but he believes it does not have the aggressive targets and concrete roadmaps needed to develop agriculture and industry, which have been lagging in terms of contribution to GDP behind services.