Marcos confident Philippines won’t enter a recession
MANILA, Philippines — President Ferdinand Marcos Jr. expressed confidence that the Philippines will not enter a recession, citing improvements in the local jobs market despite stubbornly high inflation.
“That’s why somehow we are confident that we would not have a recession in the Philippines because the unemployment rate is too low,” Marcos said in Filipino in a video.
A technical recession happens when an economy registers two consecutive quarters of negative growth.
Despite a boiling inflation that sizzled to a 14-year high in November, the Philippine economy managed to grow at an annualized rate of 7.6% in the third quarter, crushing expectations of a slowdown.
READ: Inflation soars to 8% in November, beating forecasts
Data showed consumer spending — a major growth driver — did all the heavy-lifting last quarter even in the face of rising price, all while support from government spending faded. Analysts explained Filipinos likely started hoarding in anticipation of higher prices which, in turn, could deplete their savings and leave them vulnerable to potential shocks to their income down the road.
Meanwhile, government data shows that while unemployment continued to dip, the jobs being generated are low quality and do not pay enough to keep up with rising prices.
READ: Jobless rate eases in October, but inflation sends Filipinos looking for more work
The persisting inflation problem has forced the Bangko Sentral ng Pilipinas to aggressively jack up interest rates to bring demand in line with limited supply, a move that would hit the economy where it hurts the most: consumer spending.
While experts believe the economy is strong enough to absorb the jumbo rate hikes and avoid a recession, the Marcos government is already bracing for a slower growth next year when the effects of a tight monetary policy start to bite.
At the last meeting of the Development Budget Coordination Committee for this year, the inter-agency body projected the economy to grow between 6-7% in 2023, lower compared to their previous forecast of 6.5-8%.
READ: Citing external headwinds, Marcos administration tempers 2023 growth ambition
In the video, Marcos assured that the government is “using many different ways” to tame inflation, although he did not specify what these were. — Xave Gregorio
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