Catch up and accelerate are the twin watchwords of the country’s economic managers in the remaining four and a half months of 2023. This developed after the National Statistician announced that Gross Domestic Product (GDP) grew by 4.3 percent in the second quarter. To achieve the annual growth target, the economy must grow at between 6.6 to 6.7 percent in the second half of the year.

While noting the uptrend in tourism-related spending and commercial investments in the first half, they identified the factors that dampened economic growth, namely, “high commodity prices, the lagged effects of interest rate hikes, the contraction in government spending, and slower global economic growth.”

The economic managers beamed the spotlight on the need to fast-track the execution and delivery of government programs and projects under the 2023 national budget. 

During a hearing of the House Committee on Appropriations last week, the Secretary of Budget and Management cited the low level of spending of the following departments and offices: Department of Information and Communications Technology, 5.6 percent;  Department of Migrant Workers, 10 percent; Department of Social Welfare and Development, 11.4 percent; Department of Agrarian Reform, 13.8 percent; Department of Labor and Employment,  14.1 percent; Office of the Press Secretary, 14.9 percent; Civil Service Commission, 18.4 percent; and Department of Tourism, 18.9 percent.
The economic managers directed all concerned government agencies, including local and regional government entities, “to formulate catch-up plans, accelerate, and even frontload the implementation of said programs.” They also reported that “fiscal stimulus activities are underway to increase the productive capacities of both the public and private sectors.”

While government spending left much to be desired, the National Statistician highlighted the following major sectoral contributors to economic growth in the second quarter: transportation and storage, 17.3 percent; wholesale and retail trade, repair of motor vehicles and motorcycles, 5.3 percent; and financial and insurance activities, 5.0 percent. Services grew by 6.0 percent, the highest among major sectors, followed by industry growth at 2.1 percent. Agriculture, forestry and fishing grew by a measly 0.2 percent.

Clearly, the productive sectors — industry and agriculture — continue to underperform, thereby slowing the pace of growth. While President Ferdinand R. Marcos, Jr.’s various foreign trips have attracted significant amounts of investment pledges — and approved investments were nearly 30 percent higher in 2022 compared to 2021 — actual rollout of such investments has remained sluggish. 

Amid this challenging scenario, the economic mangers glean the proverbial silver lining. They foresee that “the improving outlook for inflation bodes well for the easing of interest rates and should pave the way for the expansion of activities of businesses, households, and the rest of the private sector.”
Beyond aiming for higher growth rates, the economic managers are also focused on providing social safety nets to the most vulnerable sectors. This is demonstrated by the continuing support extended to marginalized farmers and fisherfolk, as well as to micro and small enterprises, by way of lower interest rates and credit facilitation to boost income and productivity.