Finance chief sees economy further recovering in Q4

MANILA, Philippines — The country’s finance chief expects the economy to further recover in the last quarter of the year, setting the stage for a full rebound by next year, as the government continues to ease mobility restrictions and reopen more businesses.

During a virtual economic briefing yesterday, Finance Secretary Carlos Dominguez, who heads the Duterte administration’s economic team, stressed that “the worst is over,” with third quarter gross domestic product (GDP) shrinking at a slower pace from the previous quarter.

“As we gradually reopen the economy with health interventions, our GDP performed much better. We had a smaller GDP contraction of 11.5 percent in the third quarter from a decline of 16.9 percent in the second quarter of this year. On a quarter-on-quarter basis, the economy grew by eight percent in the third quarter,” Dominguez said.

“This indicates that the Philippine economy is on the mend. This is also a strong signal that the worst seems to be over for the country.”

Dominguez said further improvements are expected in the fourth quarter as the government progressively reopens more businesses and ease transport restrictions.

“The path is clearer to a strong bounce-back in 2021,” he said.

With an 11.5 percent GDP contraction in the third quarter, the Philippine economy shrank at an average of 10 percent year-to-date.

For 2021, economic managers expect the economy to recover, with a GDP growth of between 6.5 to 7.5 percent.

According to Dominguez, the Duterte administration intends to find more ways to revive the domestic economy while strengthening the country’s health system.

“We see many areas of cooperation between the US and the Philippines on this front,” he said during the briefing, which was hosted by the Philippine embassy in Washington.

For instance, he raised the possibility of attracting US investments for the modernization of the country’s agriculture sector.

“Manufacturing is another key sector that we will revitalize in the post-pandemic era. This is a good time for the US firms that are looking to diversify their supply chains to see the Philippines as a viable source of intermediate products and services,” he said.

The finance chief also sees potential partnerships with US companies as the Philippines accelerates its shift to a digital economy.

“The COVID-19 crisis is also a time for renewed cooperation between our nations in the area of medical research,” he said.

As the Philippines continues to address the global health and economic crises, Dominguez said the government intends to maintain its fiscal discipline and to make the financial sector more inclusive.

“We are introducing additional reforms that will help us consolidate a pro-business environment,” he said.

Dominguez said the administration would continue to pursue the remaining packages of the Comprehensive Tax Reform Program, including the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill.

He said the government is also crafting measures to tax the digital economy.

Dominguez said the Build Build Build program would also play a “pivotal role” in the country’s rebound given its high multiplier effects.

”Next year, we expect the Philippine economy to post a strong rebound. The challenges are immense, but we are determined to build back a better economy that our people deserve,” he said.