February 9, 2023

Filipino Guardian

Sentinels of Filipino Free Press

PHL likely won’t go into recession, Marcos says

Families enjoy taking photos around Luneta Park in Manila, November 28. Economic managers are targeting gross domestic product growth of 6.5-7.5% this year and 6-7% in 2023. – PHILIPPINE STAR/ MIGUEL DE GUZMAN

According to President Ferdinand R. Marcos, Jr., a RECESSION in the Philippines is unlikely, citing the improvement in the job market in October.

“I’m confident that there won’t be a recession in the Philippines because the unemployment rate is very low and if you remember this government made job creation a priority from the start,” Mr Marcos said in mixed English and Filipino in a video message sent to reporters.

The Philippines’ unemployment rate fell to 4.5% in October, down from 5% in September and 7.4% a year earlier. That equated to 2,241 unemployed Filipinos in October, down from September’s 2,497 million.

The economy grew 7.6% in the third quarter, slightly faster than revised growth of 7.5% in the second quarter and 7% a year ago. Economic managers are targeting gross domestic product (GDP) growth of 6.5% to 7.5% this year and 6% to 7% in 2023.

A technical recession is characterized by two consecutive quarters of contracting GDP.

The Philippines slipped into recession during the height of the coronavirus pandemic. It posted five straight quarters of GDP contraction from Q1 2020 to Q2 2021 as strict lockdown restrictions impacted economic activity.

At the same time, Treasury Secretary Benjamin E. Diokno said recent economic data pointed to “continued strong economic performance in the fourth quarter.”

“The labor market continues to improve, the unemployment rate has fallen to its lowest level in 17 years, manufacturing output is rising and capacity utilization is improving, the peso has stabilized and is strengthening, and oil prices are falling close to pre-Russian invasion of the Ukrainian plains ‘ Mr Diokno told reporters in a Viber message on Thursday.

In the first 10 months of the year, the unemployment rate averaged 5.6%, below the 7.8% average in 2021.

Mr. Diokno also cited the improving underemployment rate and factory data.

The underemployment rate in October fell to 14.2%, while factory production rose for the fifth straight month in October.

“Manufacturing in October recorded the highest average capacity utilization of the year at 72.4%. Manufacturing is recovering well,” Mr Diokno said.

The chief financial officer said inflation is expected to slow as early as the first quarter of 2023.

“With strong growth (in the fourth quarter), it means that inflation, which is the current administration’s main concern, will soon come down as the peso stabilizes and oil prices fall,” Mr Diokno said.

Headline inflation accelerated 8% in November, the fastest since 9.1% during the global financial crisis in November 2008. Over the 11 months, inflation averaged 5.6%, faster than the 4% in the same period a year ago , but still below full-year GNP forecast of 5.8%.

The peso closed at 55.45 pesos to the dollar on Wednesday, up 52.5 centavos from 55.975 pesos per dollar on Tuesday.

“The latest numbers increase the likelihood that the GNP forecast subsequently approved by the Development Budget Coordination Committee (DBCC) will be met,” he added.

The DBCC on Monday raised the average inflation assumption for 2022 to 5.8% from the previous 4.5-5.5%. Inflation is also expected to fall to 2.5-4.5% in 2023 and return to the 2-4% target in 2024-2028.

Meanwhile, Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said the low unemployment rate indicates little chance of a recession.

“The government should continue to pay attention to headwinds and risk factors that would lead to a slowdown in economic recovery/growth, such as 14-year high inflation rate and global factors such as ongoing lockdowns in China,” he said in a Viber message.

John Paolo R. Rivera, an economist at the Asian Institute of Management, said a drop in unemployment is not the only indicator that a recession is occurring.

“Other macroeconomic indicators such as inflation and the exchange rate should be considered,” he said in a Viber message. —John Victor D. Ordonez and Luisa Maria Jacinta C. Jocson