The Marcos administration's economic team will be in the United States (US) this week to paint a resilient, fast-growing, open, united, and politically stable Philippines on the sidelines of the World Bank-International Monetary Funk (WB-IMF) Spring Meetings in Washington, D.C. *Malacañang photo*

The team, headed by Department of Finance (DOF) Secretary Benjamin Diokno, will brief some 180 senior executives and representatives of large US-based businesses, such as Boeing, Carroll, GeoX, FedEx, Visa, and Ford. They will also meet with industry associations and financial communities. In a statement, the DOF said that the message that the economic team will bring to the WB-IMF Spring Meetings is one of optimism, particularly on how the Philippines transformed itself into one of the fastest-growing economies in the fastest-growing region in the world. "Amid the unprecedented Covid-19 pandemic and the ongoing global uncertainties, the Philippine government did not sit idly by and wait for the virus to fade," it said. "Instead, it adopted new laws to open up the economy to foreign investors and make the economy vibrant and competitive," it added. On the sidelines of Spring Meetings, the economic team will unveil the many business opportunities for foreign investors in the Philippines. Joining Diokno on the trip are Bangko Sentral na Pilipinas (BSP) Governor Felipe Medalla, Department of Budget and Management (DBM) Secretary Amenah Pangandaman, and National Economic and Development Authority (NEDA) Secretary Arsenio Balisacan. According to the DOF, the economic team has a significantly strong economic story to tell, saying the numbers support the positive outlook, such as the Philippine economy growing by 7.6 percent in 2022, the highest in 46 years, and exceeding the growth assumption of 6.5 to 7.5 percent by the Development Budget Coordination Committee (DBCC). The 2022 gross domestic product (GDP) growth exceeded the median forecast of local private sector analysts (7.5 percent) and economic projections by the IMF (6.5 percent), the World Bank (7.2 percent), ASEAN+3 Macroeconomic Research Office (7.3 percent), and the Asian Development Bank (7.4 percent). The DOF said growth drivers on the demand side include household consumption, government spending, investment, and net export. "Household consumption is expected to grow significantly because of the better jobs market, direct measures to ease price pressures, lower income tax rates due to TRAIN, continued growth in Overseas Filipino remittances, and targeted interventions to preserve purchasing power," it said. The finance department also noted that government spending is expected to pick up with the early approval and timely implementation of the 2023 National budget. Meanwhile, infrastructure programs are expected to accelerate with the support of the public-private partnership (PPP) mechanism, investment-inducing reforms, wider financial inclusion, greater adoption of e-commerce, and more investments into modernization and agri-business. In addition, net export is expected to improve with the diversification of markets to expand opportunities for exporters, the approval of the Regional Economic Partnership (RCEP), the negotiation of more trade agreements, and the improved production ecosystem. On the supply side, the DOF said they expect agriculture to grow by modernizing agriculture and agribusiness through farm mechanization, product diversification, and enhanced inter-industry linkages. For industry, manufacturing and construction will drive the growth in the industry sector supported by the Industry 4.0 Strategy and the government's "Build, Better, More" infrastructure program. Growth in services will come from increased foreign and local tourists with the streamlined protocols and reopening of international borders. The services sector will also be supported by the expansion of the IT-BPO sector and quicker adoption of e-commerce by MSMEs. "In brief, on the supply side, the main drivers of growth of the Philippine economy are construction, tourism, the BPO industry, agriculture, and mining," the DOF said.

Employment

According to the DOF, the jobs market has significantly improved. The Philippine Statistics Authority (PSA) January 2023 Labor Force Survey (LFS) recorded an unemployment rate of 4.8 percent, sharply lower than the 6.4 percent rate in January 2022 and 5.3 percent in January 2020. "The steady and low unemployment and underemployment rates since the end of 2022 reflect the country's continued economic recovery," it said. "The jobs metrics are very encouraging. There are 580,000 fewer unemployed individuals in January 2023 compared to the same month in 2022," it added. The January LFS recorded a Labor Force Participation Rate (LFPR) of 64.5, up from 60.5 percent in the same month last year. Year-on-year, the higher LFPR translates into an increase of 3.5 million Filipinos joining the labor market. The DOF said that the quality of employment improved as well, citing the year-on-year underemployment dropping to 14.1 percent in January 2023, relative to 14.9 percent in the same period in 2022. The youth unemployment rate declined to 10.8 percent from 13.8 percent a year ago, as well as youth underemployment from 12.7 percent in January 2022 to 11.2 percent in January 2023.

Inflation

The DOF said inflation cooled to 7.6 percent in March 2023 from 8.6 percent in February 2023. This is within BSP's March inflation forecast at 7.4 to 8.2 percent but much lower than the median forecast of private analysts of 8.1 percent. "The main sources of the decline in headline inflation are the lower contribution to overall inflation of food and non-alcoholic beverages, transport, housing, water, electricity, gas, and other fuels," it said. According to the DOF, President Marcos remains on top of the situation as his administration adopts a whole-of-government approach to tackle inflation. "The BSP, though its 425 BPS policy rate increase, is using its monetary policy tools to cool price pressures and manage inflation expectations," it said. On the fiscal side, the administration is committed to its fiscal consolidation path by implementing the Medium Term Fiscal Framework (MTFF). Direct measures to address inflation are also pursued through the Interagency Committee on Inflation and Market Outlook (IAC-IMO). This group will serve as an advisory body to the Economic Development Group (EDG) on measures to fight inflation and ensure food and energy security while balancing the interests of producers, consumers, and the economy. "The government will intensify the implementation of programs to help boost production, enhance agricultural productivity, reduce restrictions and ensure the timely importation of goods with short supply, and strengthen ground monitoring and assessment," the DOF said.