Kezo Andre Javier

After more than a full year in office, President Ferdinand Marcos Jr. has reported to the people once again as he delivered his second State of the Nation Address on Monday. As with the previous SONAs, Marcos Jr.’s second was filled with a boatload of information – anchored on statistics and figures – covering all bases with emphasis on the economy. While he used these numbers to highlight both the administration’s achievements and challenges, it is notable that most of these painted his leadership on the positive side. However, not all of them were placed in the proper context and some were even outright false.

Cartoon by Alex Macatuno

As he tackled the state of the economy, Marcos Jr. highlighted the easing of inflation as government efforts continue to stabilize prices. In his exact words, the president said “sa mga nakalipas na buwan, nakita natin ang pagbaba ng presyo ng bilihin sa iba’t ibang mga sektor”. However, the decreasing inflation rate does not necessarily equate to decreasing prices. 

As Asst. Prof. JC Punongbayan of the University of the Philippines School of Economics (UPSE) pointed out, the price index for almost all commodity groups went up between June 2022 and the same period this year. This means that even if inflation continues to ease, prices are still going up – just at a slower rate. So as long the inflation rate is positive, prices will continue to rise. This has been true as the inflation rate dropped from 8.7 percent in January to 5.4 percent in June, and yet the general prices of goods are still increasing. Contrary to this, Marcos Jr. described a deflation phenomenon where the inflation rate is negative, indicative of a decrease in the general price index of goods, which is not the case of the Philippine economy right now.

But to put things into perspective, Marcos Jr. immediately followed the decreasing prices statement with highlights of the revived KADIWA stores. In his speech, the president reported that 1.8 million Filipino families benefited from these KADIWA stores, which offer lower prices of agricultural products by connecting farmers directly to consumers. It could be seen that the chief executive’s statement on decreasing prices of goods is anchored on the fact that KADIWA stores indeed made this a reality.

However, it is important to note that by intervening in the market, the government is distorting prices as they buy farmers’ produce with an expensive tag and sell it to consumers at an affordable price. This is not sustainable in the long run as the government is literally funding this project as a subsidy for both consumers and farmers. Eventually, the budget deficit will pile up and time will come that the government cannot fund this program – leaving the KADIWA beneficiaries with the normal market prices which are much higher than they were used to. Moreover, even at the present, only a fraction of the population can access KADIWA stores, leaving the rest suffering from the high prices in the market.

Moving on, the president focused on the national income growth rate for the country – emphasizing the 7.6 percent growth in 2022, which is the highest in 46 years. This year, the Philippine economy registered a 6.4 percent growth rate. These numbers may seem impressive at first but looking deeper, the economy is coming from a much lower base from the preceding year. The COVID-19 pandemic plunged the gross domestic product (GDP) of the Philippines by 9.5 percent in 2020. This means that any growth in the following year will be anchored on a low base, yielding higher growth rates than the pre-pandemic averages. 

However, the high growth rate the economy experienced in 2022 and 2023 are still not enough for the Philippines to recover its pre-pandemic trajectory. Even then-Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla said that it will be difficult for the country to recover its pre-pandemic trajectory, given the current figures. While the economy may be growing, it needs to grow faster in order to get back on its track had the pandemic not happened. And with the recent trend of growth figures, it will take a long time for the economy to reclaim its momentum from before the pandemic.

On top of the macroeconomic figures, Marcos Jr. underscored the newly-passed measure creating the Maharlika Investment Fund (MIF), which he says will boost funding for the administration’s top projects without incurring much debt. As he explained, the MIF will pool funds from selected government institutions to finance investments like the Build-Better-More program, consisting of big-ticket infrastructure projects. However, there are still points of contention in the MIF that puts it in jeopardy.

As the discussion paper from UPSE stated, the law is unclear on what kind of returns it is expecting from the investments because while the MIF is built to advance development in the country to yield economic returns, it also needs financial returns to sustain itself. If the MIF finances infrastructure projects like the Build-Better-More, the Filipino people would benefit as they enjoy more convenient transportation options and faster drives, among others. However, the fund itself cannot expect a financial return unless the government charges citizens for the use of infrastructure projects, just like in toll roads. This two-pronged goal of the MIF keeps the feasibility of the fund blurry even if it is already passed into law.

The economy may seem like a macro issue shared by the society as a whole but in reality, this is a micro issue that touches the lives of every single Filipino. With the rising prices and post-pandemic recovery, no one is spared from the effects of different economic phenomena in the country. Marcos Jr. laid out an optimistic perspective on the state of the Philippine economy in his SONA. However, it is important for citizens to read between the lines and understand the context behind all facts and figures that the president stated. A little research, coupled with relevant information from mainstream and social media, could spell the difference – so Filipinos can make sense of why the economy described in SONA 2023 is not seen in reality.