Mathematically, we came from a low base, there were pockets of lockdowns in 2021, but of course, any growth is magnified by that As the Philippines is expected to outpace economic powerhouses on the Asian side of the Pacific in terms of gross domestic product growth in 2023, a private-sector economist on Tuesday saw the country’s economic growth to slow this year.
During Daily Tribune’s online show Straight Talk, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the gross domestic product is likely to normalize to a range of six to 6.5 percent in 2023 from the projected 7.5 to 7.7 percent in 2022.
“Mathematically, we came from a low base, there were pockets of lockdowns in 2021, but of course, any growth is magnified by that,” Ricafort explained.
Despite the expected slowdown, Ricafort mentioned that the loosening of Covid-19 restrictions in the country helped improve economic prospects in the area and the rest of the world through increased international trade and tourism activities.
He added that the “economic defenders” are doing well, as the country’s remittances and revenues from business process outsourcing are near record highs every month and yearly.
“BPO revenues also always hit new record highs despite the pandemic because it has been contrarian in the sense that whenever there are global economic crises, well, there’s a tendency for BPOS to pick up because global companies outsource and they remain competitive,” Ricafort explained.
Ricafort added that the BPO industry tends to move jobs so they can cause them to move jobs in developing countries like the Philippines.
“(The) Philippines is number two in the world for BPO (industry and) for OFW remittances, that’s at least $35 billion per year and still growing, moving towards convenience,” Ricafort said.
He added that the BPO sector in the world is more or less a battle between the Philippines, India, China and Mexico.
Ricafort mentioned that there was even a time more than five years ago when the Philippines event overtook Mexico briefly, so imagine that’s more than $35 billion per year.
He mentioned that the total revenues that the Philippines would have from the BPOs could cover the trade deficit of the country, which is more than P50 billion.
Inflation forecast for 2023
With crude prices returning to levels seen before the Russia-Ukraine war, Ricafort sees inflation in the Philippines easing to between 4.5 and 5.5 percent in 2023 from 5.8 percent in 2022.
“(The country’s) inflation would start to ease already because of those higher base effects,” Ricafort said.
“The war between Russia and Ukraine started on 24 February, so we have to watch out for that,” he added.
Ricafort said the Philippines is already starting from a higher base for oil prices and other commodities.
“So you’re in your position, not only here in the Philippines, but around the world, would start at peace already gradually, but of course, it may not be that fast. But it will be gradual,” he added.
Ricafort also mentioned the “anniversary” of the wage hike of at least six percent in the Philippines, which happened last June and July 2022.
The chief economist of the Yuchengco-led bank said people should also “watch out” for the anniversary of fare hikes that came from a pre-pandemic low of P9.
He said the minimum Jeepney fare was gradually raised to P10 in June, then to P11 in July, and finally, P12 pesos in October, followed by wage hikes and transport fare hikes.
“Everything else followed since the prices of other goods and services also increased when the transport fares increased,” he said.