President Marcos’ chief economic manager said that domestic consumer spending, especially by the emerging workforce population of Gen Z, would remain the leading contributor to economic growth.
In a statement, Finance Secretary Benjamin E. Diokno said Wednesday, Aug. 3, that the young Filipinos’ size and spending power is the biggest source of growth of the country’s consumption-driven economy.
Data from the Philippine Statistics Authority (PSA) showed that the youth labor force last May reached 7.30 million of the estimated 20.14 million youth population or those 15 to 24-years-old. This translates to a youth labor force participation rate (Lof 36.2 percent.
Youth that are new entrants in the country’s labor force also increased from 899,000 in April 2022 to 999,000 in May 2022.
“The biggest source of growth of the Philippine economy is consumption because we have a very young population, and they are mostly, they are consumers, and very young,” Diokno said.
“If you are ageing, your demand is not that high anymore. You do not buy gadgets, you do not build a house, you do not buy new clothes [as much as before],” he added.
In May, youth employment rate improved to 87.9 percent from 85.5 percent in the same month last year, and 87.7 percent in April 2022, according to PSA.
Diokno said that the country, while being an open economy, is less susceptible to global economic shocks since, unlike other countries, the Philippines is not dependent on imports and exports.
He explained that on the supply side of the economy, the main driver of growth is industry, which includes manufacturing and services. On the demand side, growth is driven by consumption.
“The young population, they consume a lot. [Domestic consumption is] actually the major mover or source of growth, plus investment. The investment, it has a short term impact. While we are working on all these projects, you create a lot of jobs, and along the way, you create a lot of consumption also,” Diokno said.
The Filipino youth is also seen to accelerate the establishment of the country’s digital economy.
Diokno said that when he became the governor of the Bangko Sentral ng Pilipinas (BSP) three years ago, he targeted to make at least half of all transactions in the country to be in digital format and at least 70 percent of Filipino adults, meaning 18 years old and above, to have digital transaction accounts by 2023.
He added that the pandemic accelerated the shift to digital business transactions and the government is now moving closer to its target digitalization rate.
“Of course, older people like us, are finding the shift a little difficult, but you can rely on your grandchild or your son to teach you. It is fast and easy. It’s really very easy to learn, the digital payment,” said Diokno.