DOF: Domestic consumption, young population drive economic growth

Finance Secretary Benjamin Diokno said that domestic consumption, especially by the youth, remains the top contributor to economic growth.

“[A]ng biggest source of growth ng Pilipino ay consumption kasi we have a very young population, and they are mostly, they are consumers, and very young. If you are ageing, yung demand mo hindi na masyado. Hindi ka na bumibili ng mga gadgets, hindi ka na nagtatayo ng bahay, hindi ka na bumibili ng bagong damit,” said Secretary Diokno on Saturday, July 30, 2022, in an interview over a public affairs program.

(The biggest source of growth of the Philippine economy is consumption because we have a very young population, and they are mostly, they are consumers, and very young. If you are ageing, your demand is not that high anymore. You do not buy gadgets, you do not build a house, you do not buy new clothes [as much as before]).”

According to the Philippine Statistics Authority (PSA), the youth labor force in May 2022 reached 7.30 million of the estimated 20.14 million youth population or those 15-24 years old. This translates to a youth labor force participation rate (LFPR) of 36.2 percent.

Youth that are new entrants in the country’s labor force increased from 899,000 in April 2022 to 999,000 in May 2022.

Youth employment rate improved to 87.9 percent in May 2022 as compared to 85.5 percent in May last year, and 87.7 percent in April 2022, according to PSA.

Secretary Diokno said that the country, while being an open economy, is less susceptible to global economic shocks since, unlike other countries, the Philippines is not dependent on imports and exports.

He explained that on the supply side of the economy, the main driver of growth is industry, which includes manufacturing and services. On the demand side, growth is driven by consumption.

“[T]he young population, they consume a lot. [Domestic consumption is] actually the major mover or source of growth, plus yung investment. Yung investment, meron siyang short term impact. Habang ginagawa natin yung mga lahat ng proyekto na yan, you create a lot of jobs, and along the way, you create a lot of consumption also,” said Secretary Diokno.

(The young population, they consume a lot. [Domestic consumption is] actually the major mover or source of growth, plus investment. The investment, it has a short term impact. While we are working on all these projects, you create a lot of jobs, and along the way, you create a lot of consumption also.)

The Filipino youth is also seen to accelerate the establishment of the country’s digital economy.

Secretary Diokno said that when he became the governor of the Bangko Sentral ng Pilipinas (BSP) three years ago, he targeted to make at least half of all transactions in the country to be in digital format and at least 70 percent of Filipino adults, meaning 18 years old and above, to have digital transaction accounts by 2023.

He added that the pandemic accelerated the shift to digital business transactions and the government is now moving closer to its target digitalization rate.

“Of course, yung mga matatanda na katulad natin, medyo nahihirapan, but you can rely on your apo or your son to teach you. Mabilis lang po. Mabilis lang po. It’s really very easy to learn, yung digital payment,” said Secretary Diokno.

(Of course, older people like us, are finding the shift a little difficult, but you can rely on your grandchild or your son to teach you. It is fast and easy. It’s really very easy to learn, the digital payment.)