Altermidya
Economic growth in the first quarter of 2024 was accompanied by a contraction in employment from the quarter before and even from the same period a year ago. The economic managers hailed the reported growth as keeping the Philippines “a leading force among Asia’s emerging economies”. However, the difficulty in creating enough decent and sustainable work which leaves millions of Filipinos to survive off of meager incomes certainly cannot in any way be a source of “optimism and pride,” as the National Economic and Development Authority (NEDA) put it when the growth figures were released.
Year-on-year gross domestic product (GDP) was reported at 5.7% in the first quarter of 2024 and hyped as faster than in other major economies in the region. Putting the figure into context however clearly shows that the post-pandemic economic rebound is over and the trend of slowing growth in pre-pandemic 2017, 2018 and 2019 is back.
First quarter economic growth has slowed from 8.1% in the first quarter of 2022 to 6.4% in the first quarter of 2023, and now to 5.7% in 2024. The slowdown is also evident when looking at seasonally adjusted national accounts – quarter-on-quarter GDP growth slowed from 3.1% in the third quarter of 2023, 1.8% in the fourth quarter, and now to 1.3% in the first quarter of 2024 .
Not only is economic growth slowing but it is accompanied by job losses and worsening informality. The number of employed dropped by a huge 1.3 million from 49.3 million in the fourth quarter of 2023 to 48 million in the first quarter of 2024. Employment also decreased even accounting for seasonality by 288,000 from 48.2 million in the first quarter of 2023. IBON moreover estimates that about 19.2 million or 40% of total employed persons were in openly informal work in the first quarter of 2024, not yet counting perhaps some 16-18 million more wage workers in unregulated informal establishments.
The root cause of weakening economic growth and poor job creation lies in the country’s feeble economic foundations. The manufacturing sector started 2024 at its smallest share of GDP in 75 years since 1949, and agriculture at its smallest in the country’s history. The agriculture, forestry, and fishing sector grew by a mere 0.4% in the first quarter of 2024 from 2.2% in the same period last year. The manufacturing sector meanwhile grew faster by 4.5% from 2.2% but has yet to return to the 9.4% growth in the first quarter of 2022. Even the service sector has also been slowing to 6.9% in the first quarter of 2024 from 8.3% in the first quarter of 2023 and 8.4% in the first quarter of 2022. This could be another sign that the economy’s over-reliance on services is not sustainable.
Slowing growth can also be attributed to weak domestic demand – mostly because Filipino families’ spending has been diminished by low incomes and high prices. Household final consumption expenditure (HFCE), which accounts for over 70% of the economy, has markedly slowed from 10% year-on-year growth in the first quarter of 2022 to 6.4% in the first quarter of 2023 and then to just 4.6% in the first quarter of 2024.
Families’ meager incomes are clearly unable to keep up with the rising cost of living. As of April 2024, the average minimum wage nationwide is only Php441 or around one-third (36.5%) of the Php1,208 average family living wage (FLW) for a family of five.
Because Filipinos are not earning enough, there is rising hunger and widespread poverty. Filipino families experiencing involuntary hunger increased to 14.2% in March 2024 from 12.6% in December 2023, while 46% of Filipino families rated themselves as poor and 33% as borderline poor in March 2024, according to the Social Weather Stations (SWS).
For the economy to genuinely become a leading force and achieve any sort of resilience and growth means taking the necessary radical steps to shift to domestic demand-driven growth astride developing production on the supply side. Among others, the government should implement substantial across-the-board wage hikes and provide subsidies and support to small businesses and producers. It should veer away from its reliance on foreign investments as sources of growth and focus on truly strengthening domestic agriculture and Filipino industries. ###
