“This year, we continue to anticipate external headwinds – global growth outlook remains subdued… Amidst all (external uncertainties), the country’s economy, with its strong macroeconomic fundamentals, is expected to expand by 6 percent”
Amid the challenging times brought by the COVID-19 pandemic of 2020 and 2021, exacerbated by the inflationary environment of 2022 and 2023, the economy is steadily gaining ground.
Observers are confident the Philippines can navigate the ebb and flow of the global economic tide this year while addressing the fundamental weaknesses of the economy that the pandemic brought to light in the past three to four years.
As aptly put forth by investment bank First Metro Investments Corp. (FMIC), the pandemic years took the Philippines on a rollercoaster ride, tested economies and markets worldwide.
The business landscape undertook a “profound transformation,” ushering in an era of complex challenges that demanded fundamental shifts in strategy, FMIC said in a report.
“This year, we continue to anticipate external headwinds – global growth outlook remains subdued. While headline inflation has softened in many countries driven by the decline in food and energy prices, core inflation remains a concern. External uncertainties such as the movements of the Fed and a potential sharper slowdown in China could drag on growth.
Amidst all this, the country’s economy, with its strong macroeconomic fundamentals, is expected to expand by 6 percent,” said Jose Patricio Dumlao, FMIC president.
Zamros Dzulkaifli, Maybank Investment Bank Berhad senior economist, said while the economy still has to struggle with the effect of the ongoing conflict between Russia and Ukraine already on its third year, as well as the continued US China technology war chips law affecting the global semiconductor supply chain and also from the extreme weather phenomena that affects staple foods – both risking a flaring up anew of inflation, the economy is poised to continue on its growth path, potentially growth by 6.5 percent this year compared to a projected 5.8 percent growth last year.
The economy continues to be buffered by overseas Filipino remittances, cushioning the negative impact of an elevated dollar vis-a-vis the peso.
Maybank also noted “favorable labor market condition” of the Philippines, supported by the government infrastructure spending that generates job, helping the unemployment rate to stay below 5 percent since 2022.
“There’s also rebound activities. But the thing is, full recovery is still a long way,” according to Dzulkaifli.
The Philippines still has yet to attract the same level of tourists prior to the COVID-19 pandemic, though he said, an improvement in the China economy could herald the rebound of the tourism industry.
“And tourism industry has 13.5 percent share of total employment in the Philippines. So it’s sort of low-hanging fruit,” he said.
Dzulkaifli said an improvement in the demand for electronic parts will give a boost on the country’s exports.
Accounting and consultancy firm Punongbayan and Araullo noted that amidst all these, the country’s businesses are in a position to face the challenges unveiled by the COVID-19 pandemic like finding and retaining the right talent to sustain and support business operation.
Companies likewise have to further invest in technologies that support specific business strategies, like in the field of digitalization.
The advent of artificial intelligence gave businesses an avenue to speed up their post-pandemic recovery.
