Stabilizing growth of the fastest growing major economy in the world
(Part 2 of a series)
Last week the Philippine Statistics Authority (PSA) released the country’s GDP performance in the third quarter (Q3) of 2023. It was high at 5.9%, and, when compared with most large economies in the world, it was outstanding and excellent.*
GROWTH OF TOP 40 LARGEST ECONOMIES
In Table 1, I summarized the GDP growth in the first three quarters (Q1-Q3) of each year (2020 to 2023) of the Top 40 largest economies in the world by GDP size in 2022 at purchasing power parity (PPP) values. Four countries were not included — Pakistan and Bangladesh (no quarterly data), the United Arab Emirates (no data for 2023 yet), and Egypt (only Q1 data is available). So, 36 economies are included in the table.
The Philippines, with 5.6% growth in Q1-Q3, is now the fastest growing in the top 40 largest economies in the world. The economies that are contracting are those of Germany, Sweden, and Ireland. India and Iran may possibly overtake the Philippines if they retain their fast growth in Q1-Q2, but we will have to wait for their Q3 data to be released (see Table 1).
Budget Secretary Amenah F. Pangandaman correctly observed that in Q3 with “improved budget utilization… Government Final Consumption Expenditure (GFCE) grew at 6.7%… public infrastructure spending also made significant contributions to overall construction of 12.4%, and public construction grew by an impressive 26.9% as the Build, Better, More program accelerated its performance in the third quarter.”
The efforts of the Philippines economic team, plus the infrastructure team, are bearing fruit. In fact, we should not be satisfied with 6% growth — we should aim for 7%-8% growth, sustained for many years. Many companies in Europe and in the rich Asian countries are slowly moving out; the Philippines as a major investment destination will be on their radar soon.
HIGH HOUSEHOLD SPENDING AND CONTRIBUTION OF FIBA HOSTING
We now check the origin of this growth.
GDP is measured in two ways, from the demand or expenditure side, and from the supply or industrial origin side. And GDP by demand is equal to GDP by supply.
In GDP by demand, household consumption constitutes about 73% of GDP and it grew 5.7% in Q1-Q3. It pulled up overall GDP when other sectors like investment were not doing well.
In GDP by supply, services constitute about 63% of GDP and the fastest growing sub-sectors were accommodation and food service, and transportation and storage. The industry sector constitutes about 29% of GDP and the construction sub-sector was the fastest growing, at 14%, in Q3 this year — fast growth on a high base and high growth in Q3 of last year (see Table 2).
Two months ago, in this column, I discussed the potential economic contribution of the Philippines hosting of the Fédération Internationale de Basketball (FIBA) World Cup last September (“Global Philippines: The successful FIBA hosting in Manila and the OGP Summit,” Sept. 12). Dozens of foreign teams from around the world, thousands of FIBA and team officials, players, supporters and media swooped into the Philippines for two weeks. I estimated that hosting would make a 0.1% contribution to the Q3 GDP, that is, about P5.08 billion in additional value to our GDP in Q3.
From the above numbers, one could say that the accommodation/hotels and food services/restaurants subsectors increased from P77 billion in Q3 2022 to P93 billion in Q3 2023. Then, with the increase in the transportation (including higher prices of domestic and international flights) and storage subsectors, from P170 billion in Q3 2022 to P190 billion in Q3 2023, my earlier estimate of a 0.1% contribution — or P5 billion — to the GDP in by hosting FIBA in Q3 looks realistic.
So again, thanks to the Samahang Basketbol ng Pilipinas (SBP) and government sports agencies for successfully hosting the FIBA World Cup. In particular, we thank SBP Chairman Emeritus and member of FIBA Central Board, Manuel V. Pangilinan or Mr. MVP, and SBP President Al Panlilio. Good job, Sirs.
PERU HONORARY CONSULATE IN THE PHILIPPINES
Last Thursday, I was invited by the Peru Honorary Consulate in the Philippines to a reception on the beginning of duties as Ambassador of Peru to the Philippines, with residence in Thailand, of Her Excellency Ambassador Cecilia Zunilda Galarreta Bazán. It was held at Shangri-La The Fort, BGC in Taguig City. Among the people I met there were former Finance Secretary Titoy Pardo, International Chamber of Commerce (ICC) Director General Jess Varela, and Peru Consul General Francis Chua.
Ambassador Bazan’s diplomatic work will cover the Philippines, Myanmar, and Thailand — a big challenge because these three countries have big populations. Estimates for 2023 are: the Philippines 112.9 million, Thailand 70.2 million, and Myanmar 54.2 million. Peru has a population of 34.5 million.
In terms of GDP size at PPP values in 2022, the Philippines had a GDP of $1.17 trillion, Thailand $1.48 trillion, and Myanmar $261 billion. Peru had a GDP of $523 billion.
Welcome to the Philippines and the ASEAN, Ma’am. We focus on trade, investment, tourism, and job creation, and not siding with superpowers and war making abroad.
* See also these reports in BusinessWorld: “PHL economy up by 5.9% in Q3” (Nov. 10), “Sept. manufacturing output grows by 9.1%” (Nov. 10), “Fitch affirms PHL rating at ‘BBB’” (Nov. 13).
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers.
