AFTER the country missed its revised growth target last year, monetary and fiscal authorities are confident that it would grow faster this year.
Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno said on Thursday that GDP growth of 7 percent “looks attainable” this year.
This is within the government’s growth target for next year at 6.5 to 7.5 percent.
“With all sectors working as a well-oiled machine, GDP growth of 7 percent looks attainable this year [2020],” he said in a message to the BusinessMirror.
However, he said downside risks to the country’s growth for this year include failure to pass the remaining tax- reform measures, such as the Corporate Income Tax and Incentive Rationalization Act (Citira), serious delays in the “Build, Build, Build” program, as well as climate change or the country experiencing “more severe weather than usual.”
Meanwhile, Finance Secretary Carlos G. Dominguez III also expressed optimism that the country would achieve a higher economic growth this year but flagged some downside risks to the country’s GDP, including an “explosive eruption” of Taal Volcano.
In a statement, Dominguez said the economic expansion of the country would be driven by a vigorous state spending on infrastructure and social service, as well as a stronger domestic consumption and a “revitalized” agriculture sector.
The “multiple boost” from the swift passage of the 2020 national budget, extended validity of the 2019 national budget and a higher revenue take from the implementation of the Comprehensive Tax Reform Program (CTRP), plus tax administration reforms by the Bureau of Internal Revenue and Bureau of Customs, will enable fiscal expansion for greater economic activity, he said.
However, he listed among the downside risks to this year’s growth the possibly lingering impact of last year’s trade spat between the United States and China; any possible reescalation of the US-Iran conflict that could induce global oil price volatility; and, depending on its intensity, an explosive eruption of Taal Volcano that could impact Metro Manila and neighboring regions.
Diokno and Dominguez made the remarks after the Philippine Statistics Authority (PSA) released the GDP growth figures of the country for the last quarter of 2019 at 6.4 percent and full-year GDP growth at 5.9 percent.
With this, the country missed its revised GDP growth target of 6 percent to 6.5 percent. Also, it is the country’s slowest GDP growth since 2011, something blamed mostly on the delay of the passage of the 2019 budget.
“Although it did not grow as fast as we had wanted it to in 2019, the domestic economy grew faster than most other economies in the East Asia and the Pacific region last year, and it will remain among the world’s fastest-growing economies this year on the back of the Philippines’s strong macroeconomic fundamentals and the game-changing reforms implemented by President Duterte to sustain high—and inclusive—growth,” he said.
For his part, Diokno even called the full-year GDP growth of 5.9 percent—albeit an eight-year low—“still impressive” amid the slowing global economy.
“It’s progressively rising. The Philippines is still one of the fastest-growing economies in Asia and in the world. Despite a slow start last year, construction and government spending grew 11.8 percent and 18.7 percent, respectively, in Q4,” he said.
Government spending, he said, is the biggest source of growth at 18.7 percent and public construction expanded by 33.8 percent.
“With the timely approval of the 2020 budget, imagine how these sectors would look like this year. Even agriculture has shown some bounce, growing much faster in the second half of the year. The services sector, which account for half of the economy, grew by a robust 7.9 percent,” he said.
Dominguez added the “hoped for passage” by Congress this year of the remaining CTRP packages—notably the Citira—will sharpen the country’s global competitiveness; attract more investments, including in micro, small and medium enterprises; and further supercharge the domestic economy in the face of what could be a prolonged global economic slowdown.
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