Metro Manila (CNN Philippines, January 22) — The administration of President Ferdinand Marcos Jr. will face harsh economic realities in 2023 despite its glowing portrayal of the country’s economy at the World Economic Forum (WEF), a think tank said Sunday.
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RELATED: Marcos touts new investment pledges from Davos trip
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IBON Foundation Executive Director Sonny Africa thinks these issues will mar the Philippines economy in 2023:
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Misleading growth, high inflation, high prices
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During the WEF, Marcos claimed a 7% growth rate in 2023. Last June, his economic team also projected growth rates of at least 6.5% annually until 2028. Africa disagrees with their figures.
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“If their usual overestimates are any guide — and generously ignoring how wildly unmet growth was in 2020 — it is more likely that growth this year will be around 5% or even less,” he said.
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Africa described rapid growth in 2022 as misleading.
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“The real trajectory of the economy was emerging before the pandemic when growth constantly dropped from 7.1% in 2016 to 6.9% (2017), 6.3% (2018), and 6.1% (2019),” he added.
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READ: ADB hikes 2022 PH growth forecast to 7.4%
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Meanwhile, inflation hit 8.1% in December last year. Though Africa said it was projected to moderate between 2.5% and 4.5% this year, he’s not convinced prices will drop.
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“Even if the middle estimate of 3.5% is achieved, this would still be higher than the 3% average in the decade 2010-2019 before the pandemic,” he explained. “However, inflation moderating only means that the general price level will be increasing at a slower rate, not that the prices of all basic goods will fall.”
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“This is even if the price of specific commodities such as onions falls following the harvest season and pressure on monopolistic traders to lower prices,” he added.
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Onions have seen a massive price spike in the past few months.
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Marcos, concurrent agriculture secretary, previously told reporters that the administration was “forced” to import onions due to smuggling and insufficient local production.
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Africa said that importation to lower prices was an emergency measure at best and would be damaging in the long term.
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Employment
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In 2019, IBON estimated that 29.3 million or 69.9% of total employment was just informal work; these were economic activities not covered or insufficiently covered by formal arrangements in law or in practice, according to the International Labour Organization.
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Lockdowns increased the number of informal workers to 32.8 million in 2022, Africa said. When taken with the 2.68 million unemployed last year, about 73.2% of the labor force were either unemployed or in informal work.
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“It is difficult to imagine how even weaker economic activity in 2023 could possibly be conditions for creating more formal employment, more regular work, and better incomes and earnings,” he said.
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Corruption
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Africa also said “the shadow of the Marcos kleptocracy is long and makes it awkward for the new administration to even just posture as being anti-corruption. There are already early signs of much more corruption in 2023 and the years to come.”
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To him, the controversial, “re-engineered” Maharlika Investment Fund is a notable red flag of corruption.
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He also described the controversial aspects of the 2023 budget as red flags.
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“Confidential and intelligence funds of the president (₱2.3 billion) and vice president (₱650 million)… the ₱807 billion in ambiguous and opaque unprogrammed funds in 2023,” he said.
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Debt, taxation
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He forecasted that the national debt, which currently sits at a record ₱13.64 trillion, will balloon beyond projections in 2023.
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To him, the admin’s economic managers were more concerned with taxation and “fiscal consolidation,” instead of providing cash aid and social services.
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“The reason revenue generation is so meager is because the focus is on taxing poor and middle-class Filipinos who already have so little as it is — in particular, taxing their consumption,” Africa explained, referring to oil excise and value-added tax.
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“The recent proposal for a consumption tax on luxury goods misses the point and a direct tax on billionaire wealth is much more desirable,” he added.
