Sets a high bar
The Manila Times
As for the incoming Marcos administration, the direction it will take with the economy and who will be selected to manage it are at this point still only matters of speculation, as official statements on either question have not yet been offered. However, the Q1 GDP results do offer some details that should guide the new economic policy. On the positive side, the industry and services sectors showed strong growth of 10.1 and 8.6 percent, respectively. In terms of the demand side, household expenditures grew by 10.1 percent and exports by 10.6 percent. All this suggests that these are areas where it is important to maintain momentum, and not deviate drastically from the policies of the current administration. On the less positive side, the agriculture sector is the biggest worry, recording growth of just 0.2 percent. Likewise, government spending grew at just 3.6 percent, a rate slower than the current rate of inflation. Imports grew at 15.6 percent, which is positive in the sense that it pads the GDP numbers, but a concern because it shows the country’s trade deficit is growing. These parts of the economy, particularly agriculture, will require more intense focus on the part of the incoming government if growth momentum is to be maintained. And of course, there are other serious concerns that are not reflected in the GDP data, such as increased government debt that will reduce spending flexibility, persistent inflation, and the still not completely eliminated threat of another resurgence of the Covid-19 pestilence. The outgoing administration has set a high bar in managing the economy under extraordinary circumstances, and raised expectations for the incoming administration. We trust that the new president and his economic team understand that they have their work cut out for them.