MANILA, Philippines—The Philippine economy likely grew at a double-digit pace—or above 10 percent—in the second quarter, faster than the surprise 8.3 percent in the first quarter, President Ferdinand Marcos Jr.’s chief economic manager said on Wednesday (July 6).
Finance Secretary Benjamin Diokno also unveiled some of the targets of the Philippines’ medium-term fiscal framework, a first for the country, which he told ANC would be detailed by Marcos’ first state of the nation address at the start of the 19th Congress on July 25.
Diokno told a separate Palace press briefing that he was more optimistic about second quarter growth since it did not suffer from a surge in COVID-19 cases unlike the first quarter, when the more contagious Omicron strain raised infections following the Christmas holidays.
The government will report on the second-quarter gross domestic product (GDP) performance on Aug. 9.
Diokno said the Marcos administration had set a “conservative” GDP growth target of 6.5 to 7.5 percent for 2022. This was a lower range than the downscaled 7 to 8 percent growth goal set by the Duterte administration. The Development Budget Coordination Committee (DBCC) will meet on Friday (July 8) to revisit and firm up these projections.
Next year until the end of the Marcos administration in 2028, the Philippines will aim for a “more ambitious” yearly growth target of 6.5 to 8 percent, as it rides on a flurry of recently enacted reforms, Diokno said.
In his TV interview, Diokno said the Marcos administration wanted to accelerate growth in agriculture, mining, and tourism sectors post-pandemic.
The six-year fiscal framework aimed to:
- Reduce the poverty rate to its lowest-ever of 9 percent by 2028
- Revert budget deficit to pre-pandemic levels equivalent to 3 percent of GDP starting 2026
- Ease public debt ratio to 60 percent of GDP—the threshold deemed manageable by debt watchers—by 2025.
Diokno said infrastructure will also be a major growth driver with public infra spending pegged at 5 to 6 percent of GDP in the next six years, while cajoling private sector financing for 88 to 89 big-ticket, shovel-ready projects currently in the government’s pipeline.
By the end of Marcos’ term, the Philippines will also be an upper-middle income country, Diokno added.
The Philippines this year stayed in the World Bank’s lower-middle income classification as the Washington-based lender further raised its threshold for the higher upper-middle income status.
The latest World Bank data released last July 1 showed the Philippines’ gross national income (GNI) per capita rose to $3,640 in 2021, from $3,430 in 2020 at the height of its worst annual recession post-war. GNI refers to the total income generated by a country’s residents within and outside its borders, unlike gross domestic product (GDP)—a proxy for economic performance— which measures only local output.
However, the Philippines’ latest GNI per capita still fell short of the World Bank’s new GNI per capita threshold of $4,256 to $13,205 for upper-middle income countries, which was raised from $4,096-12,695 last year.
The Philippines remained a lower-middle income economy in the World Bank’s classification for this fiscal year, unable to join China, Malaysia and Thailand among upper-middle income countries.
Just like the Philippines, Indonesia (with GNI per capita of $4,140 last year) and Vietnam ($3,560) stayed as lower-middle income economies, where GNI per capita ranged between $1,086 and $4,255, up from last year’s $1,046 and 4,095.
The Philippines’ GNI per capita in 2021 also remained below the $3,850 it achieved in 2019, as its 2020 economic performance reversed the upward trend prior to the COVID-19 pandemic.
Had the pandemic not happened, the Philippines was set to graduate from lower-middle income economy status in 2020, ahead of the Duterte administration’s 2022 target.