Multilateral lending institutions are optimistic about the prospects of the Philippine economy for 2024. The World Bank is projecting a faster growth of 5.8 percent for the Philippines from an expected 5.6 percent last year. The Asian Development Bank sees growth rising to 6.2 percent from 6 percent in 2023 amid a steady pace of recovery from the pandemic across the region. It also cited the country as among those benefiting from a strong recovery in tourism. The International Monetary Fund has likewise raised its growth forecast for 2024 to 5.9 percent from 5.8 percent.
Despite such optimism, however, the majority of Filipinos still have to brace themselves for events that will hit them where it hurts the most—their pockets. Late last month, the Department of Trade and Industry (DTI) warned that prices of basic necessities and prime commodities are set to increase this year. Amanda Nograles, assistant secretary at the DTI in charge of the consumer protection group, noted last month that 18 manufacturers had given notice of impending price increases on 63 items such as bread and coffee.
Persistently high inflation
Since the start of 2023, manufacturers have been seeking higher prices due to increased costs of raw materials and production expenses. When Trade Secretary Alfredo Pascual and other DTI officials met with 29 manufacturers and two associations of producers of essential items in September last year, they were presented with issues that raised production costs, including the imposition of pass-through fees in some jurisdictions, lack of local supply of raw materials, and bureaucratic requirements from other government agencies.
In October, the DTI again met with these manufacturers and it was agreed to hold off price increases until the end of the year. The current suggested retail price bulletin was issued way back in February 2023, indicating that price adjustments are imminent.
Consumers and businesses seem aware of the continuing threat of inflation this year. The latest Bangko Sentral ng Pilipinas (BSP) surveys showed that expectations of persistently high inflation—combined with concerns about lower incomes—had dampened the optimism of both companies and households about their prospects especially in the first quarter. The findings were based on the latest quarterly survey of the BSP among 1,548 firms from Oct. 5 to Oct. 14, and a parallel Consumer Expectations Survey (CES) of 5,398 households across the Philippines from Oct. 2 to Oct. 13. Among households, optimism about the next three months declined to 5.6 percent from 7.8 percent in the previous survey.
Less favorable outlook
The consumer outlook for the next 12 months is similarly less buoyant. Households are expecting a faster increase in the prices of goods or higher inflation, lower income, and fewer available jobs. The less favorable outlook for the next 12 months was attributed primarily to concerns about the negative effects of the Israel-Hamas and Ukraine-Russia conflicts on the economy, including rising oil prices; higher prices of basic goods; increasing interest rates; and climbing costs of production and raw materials.
It is worth noting that among households surveyed last October, the percentage of those with savings decreased to 29.1 percent from 32.8 percent in the July survey, indicating that many Filipinos were using up their savings to cope with the impact of rising prices.
Worse, inflation is not expected to ease much as well. While it declined for a second straight month to 4.1 percent in November from 4.9 percent in October and 6.1 percent in September, BSP Governor Eli Remolona Jr. noted that upward pressures on prices of goods and services such as higher transport charges, increased electricity rates, and elevated oil prices continue to prevail.
Infrastructure push and investment pledges
Even the prospects for the job market do not look that bright. Though unemployment declined to 4.2 percent in October from 4.5 percent the previous month, think tank Ibon Foundation pointed out that the government cannot claim gains because “net job creation is overwhelmingly composed of part-time workers and of self-employed and other informal workers.” Even the PSA had admitted that the quality of available jobs appeared to have deteriorated as more people had sought additional working hours to augment their incomes during the month.
Given such bleak prospects for this new year, the government must do better in implementing programs to alleviate these economic hardships. It must ensure adequate supply of goods while doing its best, as promised by the DTI, to ensure that price increases would be kept to a minimum and won’t be simultaneously implemented across the different products. Filipinos can only hope that the government’s infrastructure push and investment pledges from President Marcos’ numerous foreign trips materialize to help generate more jobs this year.