Economic Prospects More Upbeat in 2020
The more robust economic growth in the third quarter of 2019 is making many businessmen more bullish on their prospects for 2010.
I will not argue with their assessment. The 6.2-percent gross domestic product growth registered in the July-to-September period, coming from a less stellar performance in the first two quarters of the year, has just proven that the economy is performing well despite the global headwinds.
Macroeconomic fundamentals and a tamer inflation rate this year are keeping the economy afloat. The recent investment figure of the Board of Investments (BOI), showing a sharp increase of 105 percent in the first nine months of 2019 to P764.7 billion from just P372.9 billion in the comparative period last year, has just made the country’s economic prospects brighter in 2020.
The GDP expanded 6.2 percent in the third quarter, putting the economy on track to meet the low end of the government’s 2019 growth target range of 6 percent to 7 percent.
The Philippines is the second-fastest-growing major economy in Asia, next only to Vietnam’s 7.3-percent growth in the third quarter. The Philippines outperformed China’s 6 percent, India’s expected growth of below 6 percent and Indonesia’s 5 percent in the same period.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno noted that the third-quarter growth showed that the government’s “catch-up plan” is working.
“The 6-percent full-year GDP growth target is a tall order, after a slower-than-expected first half, but still doable. In any event, the Philippines growth performance this year is one of the fastest among relatively large economies, amid a slowing global economy,” Diokno said.
Finance Secretary Carlos Dominguez III is more bullish and confident. The economy, he says, will sustain growth momentum in the months ahead and likely grow by above 6 percent for the rest of the Duterte administration.
I share the optimism of our finance chief. The economy has weathered adverse local and global developments—from a stubbornly high inflation rate and an extended drought to the US-China tit for tat and gyrating oil prices in the world market. The Philippine economy, in my opinion, did well despite the adversities.
Dominguez, in a forum with the country’s key chief executives, predicted that the economy was “ready to soar” after a strong 6.2-percent expansion in the third quarter of 2019.
He said the rollout of the “Build, Build, Build” infrastructure program, and the bold policy and administrative reforms being undertaken by President Duterte are backing the rosy outlook for “one of Asia’s powerhouse economies.” He cited that the Philippine economy grew by an average of 6.4 percent in the first 13 quarters of the Duterte
“…. While most of the mature economies are expected to grow slower this year, the Philippines stands staunchly as a growth leader in this dynamic region of the world,” Dominguez said.
He added that “against the headwinds of a broad slowdown in the global economy, we expect our economy to grow at around 6 to 7 percent this year. The country is strong and ready to soar.”
“Into the foreseeable future, we are confident of sustaining a 6 percent or better growth rate despite the headwinds buffeting the global economy.” I also expect the economy to sustain the robust pace it exhibited in the third quarter. The BOI figures foretell what will happen in the economy in the short-term period. While the BOI-registered investments are in the form of pledges, they will soon materialize as soon as project proponents implement their plans.
The share of domestic investments rose 55 percent in the nine-month period to P524.9 billion from P339.3 billion a year ago, while foreign investments surged 613 percent to P239.9 billion from P33.6 billion. Investment commitments outside Metro Manila, meanwhile, accounted for 98.2 percent of the total, with a projected employment of 41,862, or 38.5 percent higher than last year’s 30,218.
These investment commitments will shortly translate into employment and consumption, which will further bolster economic growth. “The sustained high growth of investments is a proof of the business sector’s strong confidence in both the Philippine economic fundamentals as further shown by the acceleration of the third-quarter gross domestic product growth to 6.2 percent,” said Trade Secretary Ramon Lopez, who is also the chairman of BOI.
Moreover, a resilient, well-managed economy under the watch of President Duterte has already seen the drop in the unemployment rate to its lowest level in 40 years, and the decline in poverty incidence from 27.6 percent in the first half of 2015 to 21 percent in the same period in 2018.
We have nothing to worry at all. The economy is just doing fine.