A veteran economist sees the Philippine economy bouncing back this year and register a growth of 5.5 to 6.5 percent due to sustained government spending and the rollout of vaccines for the coronavirus disease 2019 (Covid-19).
“The global recovery will return to strength by 2022 and the Philippine economy will start rebounding trying to reach the 2019 level,” University of Asia and the Pacific (UA&P) economist Dr. Victor Abola said during the virtual economic and capital markets briefing conducted by First Metro Investment Corporation, the investment banking arm of the Metrobank Group on Thursday.
The country’s gross domestic product (GDP) surged by 5.9 percent in 2019 but contracted by 10 percent as of third quarter 2020 due to the impact of the Covid-19 pandemic.
For 2021, Abola said the expected increase of overseas Filipino workers (OFWs) remittances; government spending geared towards Reset (health), Rebound (infrastructure), and Recover (skills upgrading) programs; and market reform initiatives can support economic growth.
Market reform initiatives designed to reinvigorate the economy include Bayanihan 2, the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE), the Financial Institutions Strategic Transfer (FIST), and Corporate Recovery and Tax Incentives for Enterprises (CREATE) bills.
Abola added other factors boosting this year’s growth are the mild inflation rate of 2.7 percent and the completion of big-ticket projects, including the Metro Manila subway, Northrail, South Luzon Expressway (SLEX) Extension, North Luzon Expressway (NLEX) East, and MRT-7 and Connector-2 easing traffic conditions in the National Capital Region.
The country’s inflation rate averaged 2.6 percent in 2020 as the impact of typhoons on agriculture products partly pushed prices higher in the last quarter.
The Covid-19 vaccination will help also boost economic growth this year.
“Hopefully, (by the) second or third quarter of the year, you will have the vaccine and the restrictions will be more focused and more localized, (in) barangay level or even less,” he said.Abola further said this year’s economic growth will be driven by the industrial sector, construction and manufacturing, while the services sector will still experience the negative impact of impact of the pandemic, particularly on travel, hotels and restaurants. SOVEREIGNPH