Secretary Arsenio M. Balisacan, PhD
National Economic and Development Authority
8th Annual Public Policy Conference
Philippine Institute for Development Studies
13 September 2022 | 9:00 AM
PIDS President Aniceto Orbeta Jr., University of Chicago Professor James Heckman, UP Professor Emeritus and National Scientist Raul Fabella, SWS Chair Emeritus and NAST Academician Mahar Mangahas, Imagine Law Executive Director and co-founder, Atty. Sophia Monica San Luis, Department of Health OIC-Undersecretary Beverly Lorraine Ho, Fellow civil servants, officials from different academic and research institutions, the business community, civil society, and the international development community, Good morning!
I congratulate the Philippine Institute for Development Studies for choosing a highly relevant theme for this year’s observance of the Development Policy Research Month or DPRM.
Compared to other countries that were struck by the COVID-19 pandemic, the Philippines’ performance, as recently reported, shows a mixed bag of good and bad news.
Let me start with the good news reflected by data from the Philippine Statistics Authority. In the first semester of 2022, the country achieved a 7.8-percent growth in its real gross domestic product or GDP, which was faster compared to major neighboring countries in the Association of Southeast Asian Nations or ASEAN. In the second quarter alone, the real GDP growth was at 7.4 percent. This positive outcome, which has been attributed to the relaxation of quarantine restrictions and increased vaccine rollout, included an expansion of sectors on the supply side, such as the services sector at 9.1 percent and the industry sector at 6.3 percent.
A similarly encouraging situation can be seen in the employment sector. There was an improvement in the unemployment rate from 7.2 percent in July 2021 to 5.2 percent in July 2022, when employment totaled about 47.4 million. Underemployment rates also improved from 21.0 percent in July 2021 to 13.8 percent in July 2022. I could stop here and end the speech on this upbeat note, but as a researcher and social scientist myself, I must objectively present the less pleasant developments in our economy.
Looking closely, some sectors of the economy have lagged, and inflation has accelerated. For instance, in the second quarter of 2022, the agriculture, forestry, and fishing sector grew at only 0.2 percent. The inflation rate also accelerated from 5.4 percent in May 2022 to 6.1 percent in June 2022, largely driven by an increase in food inflation from 5.2 to 6.4 percent. In July 2022, inflation rose further to 6.4 percent, but slightly slowed down to 6.3% in August.
More importantly, poverty has risen. Poverty incidence increased from 16.7 percent in 2018 to 18.1 percent in 2021. This is equivalent to around 2.3 million additional Filipinos being pushed into poverty compared to 2018. The unprecedented scale of the health and economic crisis, coupled with policy response challenges, caused such an increase. Socioeconomic scarring in health and education – made worse by the poor’s limited access to adequate healthcare as well as tools for remote learning – is expected to linger if it is not remedied. This is compounded by the poor’s vulnerability to environmental shocks and the lack of social protection that can cushion the impact of such shocks. These are development concerns that are at the center of this year’s DPRM theme, which will be tackled in more detail in the Annual Public Policy Conference webinar series, which begins today.
These challenges need to be addressed holistically both in the short term and in the medium term. In consultation and collaboration with various sectors, the National Economic and Development Authority has begun drafting the 2023 to 2028 Philippine Development Plan, which is framed by the 8-Point Socioeconomic Agenda. Briefly, the goal we want to achieve for this period is to reinvigorate poverty reduction and job creation by guiding the economy toward a high-growth path and develop a resilient, inclusive, and prosperous society. How do we get there?
In the near term, we must protect the purchasing power of families, mitigate the socioeconomic scarring caused the COVID-19 pandemic, reduce the vulnerability of the poor and marginalized sectors, all while ensuring sound macroeconomic fundamentals through efficient government processes. In the medium term, we aim to focus on job creation and rapid poverty reduction by addressing the most binding constraints to greater economic dynamism such as our infrastructure, regulatory environment and competition landscape, as well as public order and safety, peace, and security.
With this Agenda, the government aims to lower poverty incidence to a single-digit level by 2028 – a lofty, but achievable goal.
In the near term, the government is working on the full reopening of the economy. Current efforts involving the health sector include the DOH campaign, PinasLakas, which seeks to increase vaccination rates across the country. There is also a push to establish the Centers for Disease Control and Virology Institute of the Philippines to help strengthen the health system. Additionally, digital transformation of government processes is underway to facilitate and improve social protection. The PSA and the Bangko Sentral ng Pilipinas are in close coordination to hasten the rollout of the National ID to reach the target of 92 million national IDs released by 2023. In the education sector, face-to-face education is already being done and is expected to be fully implemented. This, in particular, is expected to prevent future productivity losses and to boost commercial activities, especially of MSMEs.
Additional investments are being made in the social protection of vulnerable segments of the population and in enhancing human capital development. For example, efforts to improve our agricultural productivity and assist farmers aim to lower input costs, develop new farming technologies, extend financial assistance, and strengthen the agricultural value chain. Fuel discounts are also being given to farmers and fisherfolk. Other fuel-related aid includes the Targeted Cash Transfer Program, Libreng Sakay Program, and fuel subsidies under the Pantawid Pasada Program for Tricycle Drivers. Alternative modes of transportation are also being eyed for more sustainable transportation. Additionally, the government is emphasizing the need to enhance skills to increase employability and encourage alternative work arrangements when these prove to be effective and productivity-enhancing.
Of course, the government alone cannot sustainably and simply provide assistance and improve economic welfare. Its efforts must be complemented by the resources, expertise, and capacities of the private sector. The socioeconomic agenda emphasizes increased private-sector participation in infrastructure investments, especially through Public-Private Partnerships. Infrastructure for water, telecommunications, transportation, logistics, and energy will be upgraded to provide a conducive environment for more investments in manufacturing, IT-BPOs, tourism, and the creative industry. We also see a greater role for the private sector in providing programs for skills development so that there will be no skills-job mismatch and so that our labor force becomes more competitive relative to our peers in the region. In addition, the government commits itself to ensuring a competitive playing field and a regulatory environment conducive to innovation from the private sector as the country’s engine of growth.
There is no magic wand for solving the economic problems of the Philippines. However, addressing the socioeconomic inequities and improving access to opportunities as we expand our economic pie is a key policy thrust that can allow us to meet our ambitious goals. This means leaving no one behind. Government programs and policies must be aligned so as to empower the vulnerable and marginalized groups and uplift their well-being and quality of life.
We at NEDA commit to this objective by enhancing national planning and monitoring and ensuring that our policies and programs are based on careful study anchored on data and a strong appreciation for rigorous policy research.
Thank you, and I wish you a productive discussion and a successful APPC.
Congratulations once again, and good morning to all.