EXTERNAL risks are expected to weigh heavily on the country’s economic growth in the second quarter, according to the National Economic and Development Authority (Neda).
In a virtual press briefing after the Development Budget Coordination Committee (DBCC), outgoing Socioeconomic Planning Secretary Karl Kendrick T. Chua said these risks are the Russia-Ukraine conflict, the US monetary normalization, and the slowdown of the Chinese economy.
Chua said the economy would have a better chance of warding off the ill effects of these risks by shifting the entire country to Alert Level 1; allowing face-to-face schooling; and accelerating the vaccination of children and seniors.
“There are two factors that we are considering. The first is from the domestic demand. We see it positively contributing to higher growth. However, we have seen inflation higher [and] the Russia-Ukraine crisis extending to the second quarter,” Chua said.
“So these will be offsetting some of the higher growth from domestic, stronger domestic demand. So we’ll have to look at all these numbers when the monthly data on unemployment [and] manufacturing come out,” he added.
Allowing face-to-face schooling alone, Chua said, will increase economic activities from 40 percent of the Philippine population. This will help sustain the country’s 8.3 percent growth in the first quarter of 2022.
Chua also explained that the strength of the domestic economy was the main consideration
behind the move of the outgoing economic team to revise only slightly the country’s GDP target to 7 to 8 percent this year, from the initial estimate of 7 to 9 percent.
“This reflects the very strong domestic economy and we can actually build on this when we fully reopen the economy by shifting to Alert Level 1, by increasing the vaccination rate, especially of seniors and children, and opening face-to-face schooling because those studying account for around 40 percent of the population,” Chua said.
“The downward revision from 7 to 9 [percent] to 7 to 8 percent is solely because of external threats to our economic growth, namely, the Russia Ukraine conflict, the slowdown of the Chinese economy, and the US monetary normalization,” he added.
In order to prevent ill effects on the incomes of Filipinos, Chua said the government has provided targeted subsidies to affected sectors such as public transport, farmers, and fisherfolk.
Chua added the economic team has also proposed the extension of the executive orders to allow greater pork and rice importation to increase supply and manage inflation.
He said the full reopening of the economy will open more income sources for Filipinos. “The most important indicator here is their real income or their take home income,” Chua said. “This is really the strategy to raise the real income.”
Meeting with Balisacan
Meanwhile, Chua said, the Neda has officially extended its congratulations to returning Socioeconomic Planning Secretary Arsenio M. Balisacan and already sought his availability for a transition conference.
Chua added that the Neda has already prepared their transition notes to pass on to Balisacan, who will be returning to the Cabinet position after steering the oversight agency for four years under the Aquino administration.
Balisacan currently chairs the Philippine Competition Commission (PCC). In a statement released to the media on Monday, Balisacan said he will be joining the new Cabinet,“mindful of the immense work needed to accelerate economic recovery and post-recovery development.” (Story here: https://businessmirror.com.ph/2022/05/23/pcc-chief-balisacan-acceptsmarcos-offer-to-head-neda/)