Despite Delta, PH expects to hit ’21 GDP growth goal

With granular instead of blanket lockdowns imposed in COVID-19 hotspots to further reopen the economy, President Duterte’s chief economic manager is optimistic that the 4-5 percent growth target for 2021 will be attained.

Finance Secretary Carlos Dominguez III told Bloomberg TV on Thursday that they expect third-quarter gross domestic product (GDP) growth to be lower than the 11.8-percent jump in the second quarter due to the recent spike in infections caused by the more contagious Delta variant.

“However, we’ve seen our cases drop, and we’re beginning to open up our economy. We still quarantine certain areas, depending on the number of cases they have—so it’s very, very targeted. We expect our economy to really start opening up this quarter,” Dominguez said.

Strong growth

As such, Dominguez said the economic team was sticking to this year’s growth goal—“We think we’ll hit it.”

Reacting to Dominguez’s statement, Capital Economics’ Asia economist Alex Holmes noted that “it will take some pretty strong growth [in the second half] to hit that target.”

First-half GDP growth averaged 3.95 percent, hence entailing a faster at least 4.05-percent expansion during the second half to reach the lower end of the government’s goal.Holmes nonetheless said that “the economic data from before the latest wave are encouraging—suggests output will rebound quite sharply once restrictions are lifted.”

Asked about criticisms that the Philippines did not move quickly enough to contain the coronavirus, Dominguez pointed to the relatively low death rate from COVID-19.

“Our death rate is only about 38 per 100,000 population, and that’s much lower than other countries like the US and Belgium,” he said.

Elevated inflation

As for the prevailing elevated inflation, which may slow economic recovery as high consumer prices deter household consumption, Dominguez said the government already identified the causes such as the African swine fever crisis which jacked up pork prices, and addressed it by increasing imports.

“Now we’re facing increasing fuel prices, but our estimates are that our inflation target will hold as long as fuel prices stay below $90 per barrel,” Dominguez said.

The government targets a manageable 2-4 percent rate of increase in prices of basic commodities, but the Bangko Sentral ng Pilipinas already conceded to an above-target average of 4.4 percent by year-end. End-September headline inflation averaged 4.5 percent, mainly due to expensive food.

For Dominguez, the Philippines’ economic prospects remained rosy en route to a recovery from the pandemic-induced slump.