Monitoring the Philippine Economy Fourth Quarter Report for 2022

The Philippine economy grew 7.2 percent, featuring robust growth despite facing domestic challenges. Fourth quarter growth reflected a more optimistic consumer sentiment as the economy continued to open up. Economic growth in Q4 2022 was 7.2 percent year-on-year and 17.1 percent quarter-on-quarter (q-o-q), showing the Philippines’ consistent effort to create a positive growth outlook for the economy (see Table 1). Year-on-year growth exceeded the median analyst forecast of 6.8 percent despite accelerating inflation and growing food security issues. Revenge spending continues to drive consumption on the demand side while service sector growth remains headstrong on the supply side amid stunted growth in the industry and agriculture sectors. Meanwhile, an expected reversal to a balance-of-payments surplus at December-end was fueled by remittances and tourism receipts during the holiday season. The trade deficit narrowed as well in Q4-end, with prospects for trade looking bright with the Senate’s eventual ratification of the Regional Comprehensive Economic Partnership in the next quarter. Looking ahead, the central bank and national government must continue to determine the effective mix of policies and straighten out its priorities to support the economy\u27s recovery

Monitoring the Philippine Economy State of the Economy Report

The Philippine economy recovered from the COVID-19 pandemic during 2022. It posted a very high annual growth rate, 7.6%, although this must be understood in the context of a low base. AKI’s State of the Economy Report focuses on three issues in the context of the new Administration’s 8-Point Socioeconomic Agenda and the Philippine Development Plan 2023-2028: growth, inflation, and the fiscal deficit and national debt. Overall, we have a positive view of the economy over the medium and long-term. However, we argue that: -The focus of economic policy has to shift decisively toward changing the structure of the economy by reducing the share of employment in agriculture and increasing exports of more complex products. Otherwise, it will be very difficult to attain (and even more so, maintain) an annual growth rate of 6.5-8% during 2024-2028, as targeted by the administration. -The Russia-Ukraine war price hike has been exacerbated by low productivity growth and an inefficient distribution system. Prices increased significantly within the Food and Housing groups. Nevertheless, the overall price increase (5.8% in 2022 and 8.3% in the first quarter of 2023) was not as dramatic as it has often been portrayed and treated. Interest rate increases will not do the job because this is not a case of excessive demand. -The government does not have full control of the fiscal outcome. Hence, targeting a 3% fiscal deficit by 2028 is an erroneous goal. The fiscal deficit outcome is mostly residual and depends on the saving preferences of the private sector. If the latter decideds to net save, the government wil have to run a fiscal deficit. Likewise, the reduction in national debt to about 50% of GDP by 2028 is also an unclear goal as most of it is domestic currency, and interest rate payments are income for the private sector. Debt issuance is a tool to maintain interest rates within the corridor set by BSP. The government of the Philippines will not default on debt issued in its own currency unless it voluntarily chooses to do so. -The administration ought to recalibrate some objetives of its economic program

The Effect of Conditional Cash Transfers on the Prepaid and Postpaid Expenditures of Internet and Cellular Services: The Case of Filipino Households

Technology has been playing a large role in the lives of households regardless of income. How, then, do poor families value the importance of internet and cellular services due to the existence of outcome-improving or outcome-worsening effects associated with these services? At the same time, since the Pantawid Pamilyang Pilipino Program (4Ps) substantially affects its beneficiaries’ household expenditures, assessing its effectiveness concerning its objectives is important. Most literature on how poor households spend their cash transfers is centered on directly linked goods such as health and education. However, the relationship between CCTs and expenditures on goods that play a more indirect yet increasing role in the lives of poor households (e.g., internet and cellular services) has yet to be explored. Using the 2018 Family Income and Expenditure Survey (FIES) with the 4Ps program serving as the treatment, a propensity score matching methodology is applied to compare beneficiaries’ expenditures on prepaid and postpaid internet and cellular services with non-beneficiaries via Average Treatment Effects on the Treated (ATT)

The effect of conditional cash transfers on the prepaid and postpaid expenditures of internet and cellular services: The case of Filipino households

The increase in the use of information and communication technologies (ICT) is promising for developing economies like the Philippines, as its role in households’ economic decisions begs the question of how poor families value these services. The study answers this by delving deeper into conditional cash transfer (CCT) programs. Most existing literature dissects the impact of CCTs on increasing health, nutrition, and education expenditures; however, there is still an opportunity to assess its impact on internet and cellular services expenditures. Using the 2018 Family Income and Expenditure Survey (FIES) with the Pantawid Pamilyang Pilipino Program (4Ps) serving as the treatment, a propensity score matching methodology is applied to compare beneficiaries’ expenditures on prepaid and postpaid internet and cellular services with non-beneficiaries via Average Treatment Effects on the Treated (ATT). The researchers found that being a 4Ps beneficiary does not significantly affect spending on internet connection services, postpaid cellular phone subscriptions, payment for prepaid communication, and the total of these three variables when compared to non-beneficiaries