The year 2023 has been acknowledged by the International Monetary Fund as a year of global economic recession that would hit one-third of the world’s economy.
The economic difficulties have been brought about by Russia’s war in Ukraine, causing oil prices to rise to historic levels, disrupting global supply chains, causing currency fluctuations and the ensuing wild inflation in all economies. The world is in disarray.
Latest data, however, seemed to smoothen the soothsayers’ dim predictions. If we are to believe our own economic data indicators, we are in for a relatively smooth ride this year.
Consider some of the recently released data. According to the Philippine Statistics Authority, the inflation rate in December rose by 8.1 percent on annual basis from 8.0 percent the previous month.
Although it is the highest in 14 years, it is lower than the Bangko Sentral ng Pilipinas (BSP) target band that inflation in December could peak at 7.8 to 8.6 percent. The 8.1 percent inflation in December also brought the actual full-year average at 5.8 percent, which is also on point with BSP’s previously announced 2022 average forecast of 5.8 percent.
The BSP, whose policy is anchored on inflation targeting, said that the latest 8.1 percent inflation is consistent with its assessment of elevated inflation that will hit its high in December before slowing down in 2023. This means the pace of growth in prices of goods is decelerating. For 2023, the BSP forecasts inflation at 4.5 percent, still above the 2-4 percent target. By 2024, the forecast is 2.8 percent.
Another positive economic indicator is what the PSA reported on Friday, Jan. 6, that the level of unemployment in the country dropped to 4.2 percent last November from 6.5 percent in the same month a year ago. It is also down from 4.5 percent in October.
The latest jobless rate was also the lowest since April 2005. Accordingly, the employment rate increased to 95.8 percent, or an additional 4.2 million persons getting jobs. This brings the total employment to 49.7 million.
On the foreign exchange side, the central bank is doing a good job in stabilizing the wild swings that we’ve seen in the peso sometime in September last year. So far, the peso is holding up. The local currency remains in the P55-level against the greenback, a wide distance from the P68-level projection of a not-so responsible economist.
Finance Secretary Benjamin E. Diokno has declared the “worst is over” and there are many reasons to be optimistic this year. The pandemic, though still a threat, is actually now behind us with readily available vaccines.
Despite the country’s mounting debt burden, the world’s major credit rating agencies such as Moody’s, S&P, and Fitch have maintained the Philippines’ investment grade credit ratings.
The Development Budget Coordination Committee (DBCC) forecasts that the domestic economy will grow by 6-7 percent this year. This is still one of the highest, if not the highest, growth rates among peers in the region.
The budget for 2023 was approved in time, meaning there will be no disruptions in the release of funds for major infrastructure projects and government services.
All these are silver linings in our recovery efforts.
Every year, there are many feasts and festivals that show religious fervor in the Philippines, and it starts with the most celebrated one – the feast of the Black Nazarene on Jan. 9.
