JUNE 30, 2023 — President Ferdinand ‘Bongbong’ R. Marcos, Jr. began his term under very challenging and unique economic circumstances. The macroeconomic shock from COVID-19 – a significant 9.5% contraction in 2020 – came with a number of socioeconomic setbacks. These include the tighter fiscal space in the form of a higher national debt and fiscal deficit, as well as social and economic scarring in terms of learning losses, business closures, and record levels of unemployment. With the rollout of the country’s vaccination program in 2021, the economy gradually began its rebound, expanding by 5.7% that year. In 2022, President Marcos’ assumption into office provided the critical pivot toward the country’s full recovery from the COVID-19 pandemic. Moreover, his leadership is charting for the Philippines a path that is resilient and inclusive. 

Recognizing the immediate issues at hand, the President crafted his 8-Point Socioeconomic Agenda, a list of priorities that would guide the policies, programs, and initiatives of his presidency. The agenda not only focuses on pressing, short-term issues such as inflation, a tighter fiscal space, and socioeconomic scarring, but also on priorities for the medium term to reinvigorate higher-quality job creation and accelerate poverty reduction in the next six years.  

These priorities were key in shaping his Economic Team’s early initiatives and outputs, including the country’s Medium-Term Fiscal Framework, which ensures the alignment of the legislative agenda with the attainment of sound fiscal targets; the PHP 5.268-trillion People’s Enacted Budget for FY 2023, focusing on the identified socioeconomic priorities of the President; and the Philippine Development Plan 2023-2028 (PDP 2023-2028), the country’s medium-term development blueprint to effect socioeconomic transformation for a prosperous, inclusive, and resilient society. Notably, the PDP 2023-2028 is the second medium-term development plan anchored to the country’s long-term vision of a matatag, maginhawa, at panatag na buhay for all Filipinos, the AmBisyon Natin 2040. 

One year into the Marcos Presidency, the Philippine economy remains firmly on track as it returns to its high-growth norm, supported by a strong labor market performance and a downward-trending inflation that is on its way to reaching the government’s target. In recognition of the urgent need to regain lost ground, the decisive reopening of the economy reinvigorated the country’s main growth drivers, particularly, consumption on the demand side and the services sector on the supply side, as firms in the high-contact sectors in retail, transportation, and tourism benefited the most from the removal of mobility restrictions. 

Thus, the country saw robust gross domestic product (GDP) growth, with output expanding by 7.7% (Q3 2022), 7.1% (Q4 2022), and 6.4% (Q1 2023) in the first three quarters of the Marcos Administration. The 2022 full-year growth average is at 7.6%, which exceeds the government’s target for the year of 6.5-7.5%, while real GDP per capita surpassed pre-COVID-19 levels beginning in the fourth quarter of 2022. These indicators paint a promising picture of a sustained recovery for 2023. The country’s strong economic rebound was likewise reflected in the labor force statistics: the latest unemployment figure in April 2023 was recorded at 4.5%, down from 5.7% in April 2022. Indicating improved quality of jobs, the underemployment rate also fell to 12.9% from 14.0% in the same reference periods. Notably, the latest unemployment and underemployment rates are even lower than the pre-pandemic rates in April 2019. Meanwhile, inflation has steadily moderated, coming from a peak of 8.7% in January 2023 to 6.1% in May 2023. With this trajectory, the Bangko Sentral ng Pilipinas expects inflation to return to the 2-4% inflation target by the fourth quarter of 2023.  

The Marcos Administration recognizes that to effect economic and social transformation for a prosperous, inclusive, and resilient Philippine society, it must diversify the country’s sources of growth by expanding its markets, raising productivity, and enhancing the value added for the country’s products and services.  At the same time, the country must prepare its workforce with the needed skills, build its income-earning ability, and ensure that these capabilities are protected from the adverse impact of various risks.   

Towards this end, President Marcos has set a clear policy direction and conveyed signals to investors and trading partners that the Philippines is indeed “open for business.”  

First, the government has acted swiftly to create a more open and enabling regulatory and investment policy environment, leveraging the reform momentum of the last two decades. It has enabled the effective implementation of key measures such as the CREATE Law, as well as the amendments to the Public Services Act, Foreign Investments Act, and Retail Trade Liberalization Act.  

Second, the President has shown his deep commitment to pursue sound and cohesive policies by having a Cabinet with members who capably understand the constraints that need to be addressed to realize the President’s socioeconomic agenda. 

Third, as a “friend to all and enemy to none,” the Philippines has further opened its economy to trade, investment, and competition with its accession to the Regional Comprehensive Economic Partnership (RCEP); the creation of Green Lanes for Strategic Investments; the amendments to the Implementing Rules and Regulations of the Renewable Energy Act and the Build-Operate-Transfer Law; and the changes to the NEDA Joint Venture Guidelines. Moreover, the Build-Better-More program, as well as the project pipeline for public-private partnerships (PPPs), aim to further upgrade the country’s infrastructure fundamentals, focusing on physical and digital connectivity as well as transportation, energy, water, and telecommunications, and logistics.  

Fourth, the Marcos Administration has shown that innovation ranks very high among its list of priorities. President Marcos has taken a hands-on approach as he personally convenes the National Innovation Council (NIC). He has impressed upon the NIC members the urgency of establishing a dynamic innovation ecosystem, which is key to sustaining rapid economic growth and improving the quality of life in the long term, even amid natural and human-induced hazards.  Going forward, the government will institute several policies and implement programs to create a vibrant innovation culture, capacitate innovation actors, encourage collaboration, and connect these actors to various markets. 

Lastly, the NEDA Board, chaired by President Marcos, has been actively pushing for the rigorous assessment and swift approval of major projects to ensure their timely and effective implementation while upholding public interest. The government has also actively enlisted the help of the private sector in marketing the country as a promising investment destination and in creatively designing and carrying out its programs and initiatives. Private-sector confidence in public institutions and processes appears to have returned quickly, in contrast to the wait-and-see attitude one might often observe during significant transitions at the national level. 

Such reforms and initiatives show the world that the Philippine government is serious about implementing measures to reduce the cost of doing business in the country and raise its competitiveness as it aims to attract greater investments that support high-quality job creation and sustainable and inclusive growth. The Economic Team is pleased to say that more such reforms and initiatives are on the way. 

In all these, the Marcos Administration is committed to ensuring that the poor and vulnerable are protected from economic shocks. Several of its initiatives are in line with this objective: the prudent provision of targeted transfers and assistance to segments of the population that are hardest hit by inflation; the establishment of the Inter-agency Committee on Inflation and Market Outlook (IAC-IMO) to monitor supply and demand conditions proactively for essential commodities and recommend timely policy interventions to manage inflation; the approval of the Social Protection Floor to institutionalize basic social security guarantees; and continuous efforts to expedite the rollout of the National ID in order to hasten the creation of a more efficient and inclusive social protection system enabled by digitalization. 

Overall, despite the many challenges and headwinds it has faced, the Marcos Administration has successfully navigated its first full year in office but recognizes that much is yet to be done. Guided by the strategies it has formulated and the frameworks it has instituted, the government shall continue to work with the private sector and members of civil society so that the country may progressively attain its ambitious development targets.  

I look forward to the next years with much optimism and excitement.

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