Stabilizing growth: Declining inflation and unemployment rates
(Part 1 of a series)
This column will produce another series, “Stabilizing growth” and focus on inflation and employment data of the Philippines compared to other major countries in Asia and the world. This is on top of the “Financing growth” and “Energizing growth” series.
The global economic environment continues to remain volatile and even worsening for many industrial countries. But two key economic indicators point to some improvement for the Philippines and Asia — declining inflation rates and unemployment rates.
This week the Philippine Statistics Authority (PSA) released the inflation rate for October 2023 — it is 4.9%, down from 6.1% in September 2023 and 7.7% in October 2022. And the unemployment rate for September 2023 is 4.5%, down from 4.8% in July 2023 and 5% in September 2022.
The top three contributors to the Philippines’ high inflation rate this year are Alcoholic beverages and tobacco (ABT), Food and non-alcoholic beverages, and Restaurants and accommodation services. So, one can say that high inflation is due to people going out more — eating out, partying, drinking, vacationing. Which could be indicators of high consumer confidence.
In the table below, I group the countries into three: in Group A are the G7 industrial countries, in Group B are the big South Asian economies, and in Group C are the big East Asian economies. The Philippines has the highest inflation rate this year among its neighbors in East Asia, and comparable to those in Italy and Germany. But our unemployment rate has declined by half from two years ago, from 8.9% in September 2021 to 4.9% this September. This is a good development.
High GDP growth with declining unemployment is a good trend. Kudos to the hardworking economic team of Finance Secretary Benjamin Diokno, Budget Secretary Amenah Pangandaman, and Economics Secretary Arsenio Balisacan. Next we can aim for an unemployment rate of below 4% in the coming months.
The PSA will release the 3rd quarter 2023 GDP data today; we will discuss it Tuesday next week. But things are worsening in the west and even in several Asian economies. For instance, when it comes to the average GDP growth for Q1-Q3 2022 to Q1-Q3 2023, the figures are: South Korea, 3.1% to 1.1%; Taiwan, 3.5% to 0.1%; Singapore, 4.2% to 0.5%; Malaysia, 9.2% to 3.9%; and Vietnam, 8.9% to 4.3%.
It is much worse in Europe. Over the same period, Germany went from 2.3% to -0.2%, Italy went from 4.7% to 0.8%, and France went from 3.2% to 0.9%.
If the Philippines grows by 4.9% in Q3 based on BusinessWorld’s poll of local economists, then the average Q1-Q3 growth will be 5.2%, much higher than all the countries mentioned above.
I like the optimism of Emilio “Jun” Neri and Michael Ricafort, chief economists of BPI and RCBC respectively, for their projection of 6% for Q3. I share their optimism and projection. See these reports in BusinessWorld: “GDP likely grew 4.9% in Q3 — poll” (Nov. 6), and “PHL on track to hit medium-term targets — Diokno” (Nov. 6).
We should focus on fast and sustained growth. More jobs and businesses for our people, less business pessimism and political waste.
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.
