This year, the country’s main focus economy-wise was to get back on track. It was a tall order considering many outside factors that have heavily impacted the country’s economy this year – between the continuing pandemic, the slower pick-up of boosters, the election and administration change, global inflation, and so much more.
It would have been understandable to expect exceptionally slow growth if any at all. After all, the world was still getting back on its feet, and while some countries may have gotten up faster than others, the truth is that opening borders and businesses wasn’t easy by any stretch of the imagination.
Many countries that opened too early faced difficulties with soaring COVID cases, while countries that opened too late were playing catch-up and trying to rejoin the global market and revive businesses and livelihood. In the Philippines, many businesses survived the pandemic only to shutter during the 2022 re-emergence.
That’s not surprising, either. While the pandemic was an unprecedented global health crisis that impacted us all, what followed has proven even more fatal for small to medium enterprises struggling and focusing on getting back on track.
This is likely because most businesses and people were hesitant to change and shake things up during the height of the pandemic. When COVID was at its peak, the main goal of everyone was just survival. Businesses and consumers just focused on making it through the day, and if a week went by successfully, that was already considered a win.
But things are different now. Now that restrictions have been lifted and life is somewhat returning to normal, things are slowly starting to change – and not necessarily for the better. For businesses and consumers that survived the past two years, the focus has again shifted.
Survival isn’t the main driving factor now. Now it’s planning ahead. While we kept goals short-sighted in 2020 and 2021, this year has seen businesses taking a closer look at their resiliency and future-proofing. And while this may be good for the company, this also heralded a brand new era of change.
Cost-cutting and streamlining became important as companies focused on fighting inflation and seeing where they can save. Digital solutions that emerged during the pandemic were closely looked at and often scaled up. This caused redundancies in several organizations, and leaders have been forced to look at where they can cut corners and streamline more.
Unfortunately, this has led to layoffs and cutting contracts sustained over the past several years. Many big companies that worked successfully with several vendors have had to reexamine relationships in light of inflation and potential global recession, which has meant lost business for many enterprises.
Consumers are changing their spending patterns. When the doors opened and people could go out into the world – spending a lot was common. Revenge travel and shopping were a means of getting back “lost time” from the past two years, and people wanted to have fun.
And while that happened for a while, rising prices and inflation eventually made people stop spending with abandon and reexamine where they will spend their money. Many outside factors show that inflation will continue to worsen, causing consumers to cut back on gallant spending, which also impacts businesses.
But it’s not all gloom and doom. According to financial analysts, the Philippines still recorded better-than-expected gross domestic product growth of 7.6 percent in the third quarter. The President’s decision to reopen the economy can be seen as the economy heading in the right direction, allowing more business activities and boosting economic recovery.
But, as mentioned, we should remain prudent, knowing that this is an adjustment period. While more business and consumer activities are good, the way this will continue is still being defined. Many financial analysts still predict slow economic growth in the year ahead due to inflation and the rising cost of goods and services.
While third-quarter growth is good, it’s also possible that the third quarter revival in consumption was made possible by an increase in borrowing and a redirection of savings, which are unsustainable in the long run. Increased spending has also made it harder for households to save, and it’s only a matter of time before they realize this and make financial cutbacks.
Plus, with a global recession on the horizon, exports and global spending is seen to be conservative at best.
We are in a transition period, and both businesses and individuals now have to define what the next few years will look like. Planning ahead is now taking center stage as opposed to the live day-by-day mindset of the past two years.
If we want to continue to push the economy in the right direction, we have to be strategic about it. Revitalizing business and consumer activities is a step in the right direction, but this needs to be bolstered with fiscal consolidation and infrastructure development to stop debt from increasing and lay the groundwork for the long run.