Philippines economic growth rate slows to 2.1 per cent

Recent data on the Philippine economy shows a worrying situation, with the economic growth rate dropping to 2.1 per cent. According to a report by Rappler, this is the weakest growth rate since 2009, although the period before 2009 is considered excluding the COVID pandemic era. Alongside this economic slowdown, inflation in the country has risen to 7.8 per cent and the unemployment rate has also increased to 5.4 per cent.

Due to these figures, the Marcos administration is on track to miss its annual growth target for the fourth consecutive year. To reach even the lower end of the government's revised target of 3.5 per cent to 4.5 per cent, a growth rate of 6.3 per cent is required in the fourth quarter, which is extremely difficult to achieve. Arsenio Balisacan, Secretary of the Economy, Planning and Development Department, has also warned that businesses should not expect a rapid improvement in consumer spending. Speaking to journalists on 9 November, he stated that they do not expect a strong increase in consumer spending in the near future due to the prolonged effects of inflation.

Household consumption grew by only 2.4 per cent in the third quarter. Emilio Neri Jr., Chief Economist at BPI, noted that there was an 8.5 per cent increase in nominal spending, suggesting that this increase was to keep up with rising prices rather than to purchase more goods or services.

However, amidst these economic figures, some large businesses are reporting stability in the situation. Steven Tan, President of SM Group, stated that customer footfall at malls is stable and there was a double-digit increase in food and beverage sales in the month of October. Customers are spending more time at malls, which may be an attempt to consolidate travel flows due to rising fuel prices. Jeffrey Lim, President of SM Prime, admitted that demand in the residential sector is weak, but added that the company will prioritise stable income sources such as malls, hotels, and conventions. He clarified that they are not halting their expansion plans but are being more cautious with spending.

According to Zander Lau, President of Cebu Pacific, despite high fuel costs and ticket prices, Filipinos continue to spend on travel. The airline expects to surpass last year's record of 26.9 million passengers. On the other hand, a recent study by Organic Intelligence revealed that 45 per cent of surveyed people in urban Philippines stated that inflation has reduced their motivation to move forward.

Joel Consing, President and CEO of Maharlika Investment Corporation, sees opportunities even in this difficult economic situation. Speaking to journalists at the Fourth Asian Investment Forum, he said that weak economic growth could lead to changes in asset prices and create attractive opportunities for investors. He further stated that their investment strategy is not affected by the weakness in GDP because Maharlika's infrastructure investments meet long-term needs.

The government has emphasised the need to increase Foreign Direct Investment (FDI) to support economic growth and innovation, as net FDI flows have seen a significant decline.

The Philippines is an island nation located in Southeast Asia that has long made significant progress in economic development and tourism. Consumer spending and foreign investment play important roles in the country's economy.