OPENING REMARKS

Arsenio M. Balisacan, PhD

Secretary

National Economic and Development Authority Year-End Press Chat

December 13, 2023 | 10:00 AM

 

Friends from the media;

Fellow NEDA officials and colleagues;

Ladies and gentlemen,good morning.

 

First, thank you, the members of the media, for being our constant partners in reportingprecise and reliable information about the state and progress of our country’s economicand social development. Our close collaboration ensures that the Filipino public remains well- informed and engaged in the country’s economic governance as we collectively pursue our socioeconomic goals.

Recall that in December 2022, we completed the Philippine Development Plan or PDP 2023-2028. Launched in January 2023, the Plan ensures that government resources, programs, projects, and overall strategies are aligned with the President’s 8-Point Socioeconomic Agenda. Our constant refrain has been this: that the Plan aims to reinvigorate job creation, accelerate poverty reduction, and transform the Philippines into a prosperous, inclusive, and resilient society.

One year after implementing the PDP, it remains the country’s roadmap for achieving our long-term vision – our AmBisyon Natin 2040. We also ensured the timely completion and launch of our Regional Development Plans or RDPs, which, in turn, outlined strategies and priorities responsive to the specific and diverse needs of our 16regions, including the Bangsamoro Autonomous Region of Muslim Mindanao.

I’d like to do a quick rundown of updates on our performance during the year concerning the primary macroeconomic targets set under the PDP.

Let me start with incomes, prices, and jobs.

In the face of many domestic and international challenges, we have effectively implemented the appropriate strategies to sustain the economy’s forward momentum.

For the first three quarters of 2023, the Philippines averaged a GDP growth rate of 5.5 percent, making it among the best-performing economies in Asia.

While this falls below our target of 6 to 7 percent growth for the year, we are confident that we can still reach the lower end of the target – or, at the very least, hit a figure near the lower end of the range. Again, we need to grow by at least 7.2 percent in the fourth quarter to achieve the official target.

For the first three quarters of 2023, we observed that real GDP per capita had already recovered and exceeded its pre-pandemic level. Most sectors have already reached higher levels than their pre- pandemic performance. While some sectors such as mining and quarrying, construction, transportation and storage, accommodation and food service, real estate, and other services have not yet fully recovered as of the endof the third quarter, this also implies that we can still look to these sectors as continued growth drivers of our economy, especially as we continue boosting efforts to promote tourism and ramp up the construction of major projects.

When we entered 2023, inflation was among the most significant challenges we needed to address. In January, the inflation rate rose to 8.7 percent, with food price increases being the main driver. We faced a battery of challenges throughout the year: inadequate importation to cover domestic demand; high prices of farm inputs; the decimation of our crops due to typhoons; the spread of animal diseases, as well as logistical bottlenecks and competition issues along the supply chain for food.

The government swiftly implemented strategies to manage food commodity prices and protect Filipino families’ purchasing power, particularly those of people experiencing poverty and households from the most vulnerable sectors. We have seen the steady easing of the inflation rate throughout the year. It fell to a 20-month low of 4.1 percent in November, bringing us closer to our desired level of 2 to 4 percent.

However, we cannot and will not be complacent, as we continue to have the highestinflation rate among Southeast Asian peers. This is amid our many risks, including the El Niño phenomenon and the simmering geopolitical tensions that may increase uncertainty and disrupt supply chains.

In May this year, the President established the Inter-Agency Committee on Inflationand Market Outlook or IAC-IMO—co-chaired by the NEDA and the DOF—to provideappropriate and timely policy advice to manage inflation in a coordinated, whole-of-government approach. The IAC-IMO monitors food and non-food inflation drivers closely, keeps track of local and international market developments, and develops andrecommends economically sound policy proposals to the President to keep inflation in check and ensure that Filipinos have access to their basic needs.

For our people to cope with rising prices, we must also ensure that the country’s labormarket remains dynamic and vibrant. The most recent data show that the unemployment and underemployment rates dropped to 4.2 percent and 11.7 percent, respectively, in October 2023. These numbers decreasedfrom 4.5 percent and 14.2 percent, respectively, in the same month last year. While the unemployment rate is already relatively low, even relative to the rates observed in advanced economies, we recognize that we must work even more to improve Filipino workers’ employment quality.

The Marcos Administration remains committed to prioritizing creating high-quality and high-paying jobs to address the rising issue of vulnerable employment. To achieve this,we must focus on enabling job-generating investments from the private sector and dramatically improving human capital, as well as ramping up social and physical infrastructure to improve our people’s employment prospects.

These macroeconomic outcomes are in line with the Medium-Term Fiscal Framework, which ensures that our economic fundamentals are sound, and our house is in order. This ensures that we can sustain our growth in the medium- and long-term. Through government efforts to improve the fiscal space, and despite numerous economic headwinds, revenue collections rose by 9.4%, while debt-to-GDP and deficit-to-GDP ratios decreased relative to their year-ago levels.

This year, the Marcos Administration has exerted significant effort to promote thePhilippines as a destination of choice and investment hub in the ASEAN region. This is one of the cornerstone strategies of his economic program. In coordination with the Economic Team, we have pushed for and facilitated policy initiatives to create an enabling environment for investments, trade, and innovation.

This year, the NEDA Board approved the list of 197 Infrastructure Flagship Projectsamounting to about PHP8.7 trillion, which aims to address the economy’s long-standing infrastructure deficits. Such gaps act as binding constraints to business investment and expansion. Again, the goal is to generate more well-paying and secure jobs for Filipino workers. This is crucial in substantially decreasing our country’s poverty rate to single-digit levels by 2028 from 18.1 percent in 2021.

By prioritizing the completion of vital projects like highways, bridges, airports, railways, ports, telecommunications, and other infrastructure, we will be able to significantlyreduce the cost of doing business, expand market opportunities, especially for micro, small, and medium enterprises, and promote high-quality job creation and innovation.

Given the government’s limited fiscal space, we have identified public-private partnerships as essential to its physical and social infrastructure drive. Pursuing PPPs allows us to tap into the private sector’s valuable technological and managerial expertise and its financial resources to propel our development efforts forward.

The President recently signed the Public-Private Partnership or PPP Code into law. The law harmonizes the regulatory and legal frameworks for PPPs and strengthens theenabling PPP institutions. Through the PPP Code, we aim to reinforce the country’sinvestment ecosystem and assure private-sector investors of a more stable and predictable policy environment to foster collaboration on high-impact infrastructure projects.

The amended Public Service Act Implementing Rules and Regulations or IRR became effective in April 2023, a year’s worth of collective effort with 21 implementing agencies. This enables 100 percent foreign ownership in key infrastructure sectors of the economy such as airports, telecommunications, railways, expressways, tollways, and shipping. We expect to reap the economic dividends from investments in thesesectors in the coming years.

Furthermore, the Philippines joined the Regional Comprehensive Economic Partnership or RCEP Agreement, making a significant step toward strengthening our position as an attractive trade and investment destination in the ASEAN region. Thismove expands our market access – a boon to our export sector – and streamlines trade regulations in alignment with our economic objectives. We aim to forge similar partnerships with many other countries, either bilateral or multilateral.

The creation of the Maharlika Investment Fund provides the government with an additional vehicle for making strategic investments in areas critical to the development of the country.

In terms of sustaining long-term economic growth, we recognize innovation’s crucial role in boosting productivity. This year, the National Innovation Council, chaired by thePresident, approved the National Innovation Agenda and Strategy Document or NIASD for 2023-2032, which outlines the country’s Plan to enhance innovation governance and cultivate a dynamic innovation environment.

We published the IRR of the Digital Workforce Competitiveness Act, which will ensure the upskilling, re-training, and training of our workforce for the emerging demands of the labor market.

This year, we have moved our country’s ranking in the Global Innovation Index from59th to 56th out of 132 countries. This inspires us as we continue to seek outpartnerships for collaboration with the private sector as the main engine of innovation and as we further recalibrate the policy environment to enable the generation of new ideas, products, and processes.

Let me now turn to our outlook for 2024.

As you know, the multilateral institutions have projected a comparatively strong growthperformance for the Philippines in 2024. We aim for a GDP growth rate of 6.5 to 8.0 percent. The DBCC will meet on Friday this week to re-assess the growth targets,especially for 2024, in light of recent developments, particularly the continuing weakness of the global economy.

As we approach the New Year in a few weeks, we are keenly aware of the persisting challenges we confront as we aim to hit such a target. Elevated inflation remains a risk because of the onset of El Niño, which is expected to persist until the second quarter of 2024 and may bring drought to as many as 65 provinces and dry spells to six other provinces. Meanwhile, external price pressures stemming from geopolitical tensions and the imposition of export bans in other countries remain, which may drive global prices higher and raise uncertainties in the availability of food supplies. Moreover, thelimited absorptive capacity of implementing agencies continues to pose challenges,even as we seek to stick to our spending catch-up plans to drive growth.

We know that we must intensify implementing inter-agency measures to tackle supply-side limitations and curb the rise in food prices. We have been mobilizing for the anticipated impacts of the upcoming El Niño through a comprehensive, coordinated, science- based approach involving the national and local governments and the water,agriculture, energy, health, and public safety sectors.

Recently, the President created the Task Force El Nino led by the National Disaster Risk Reduction and Management Council under his office to serve as the coordinating body to consolidate all measures to mitigate the impacts of the El Niño phenomenon.

We shall expedite the effective execution of programs to utilize government appropriations for public services and infrastructure programs fully and by properly implementing reforms and initiatives intensifying efforts to promote investment and trade.

Building on the reform momentum, NEDA shall vigorously advocate for the critical pieces of legislation in its policy advisory role and as the Secretariat of the Legislative-Executive Development Advisory Council or the LEDAC. These forthcoming reforms are designed to optimize the utilization of limited and valuable resources such as land, minerals, and public revenues. The legislative measures addressing systematic challenges in particular sectors are intended to facilitate the development of industries and economic drivers that will create a more significant number of high-quality jobs, open up a variety of opportunities for our workers, and lead to sustained reductions in poverty and vulnerability in the future.

I am optimistic that we can continue to drive and maintain our economic progress for the coming year and beyond. With our priorities in check, we remain hopeful that 2024will bring us closer to achieving our cherished AmBisyon – that of a matatag, maginhawa, at panatag na buhay para sa lahat. 

Maraming salamat, at maligayang Pasko sa inyong lahat!

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