Dominguez sees “pretty good” second quarter GDP growth

MANILA, Philippines—The economy likely reverted to “pretty good” growth during the second quarter en route to achieving the full-year 6 to 7 percent GDP target, boosted by mass COVID vaccination which is picking up steam, President Rodrigo Duterte’s chief economic manager said on Wednesday (July 21).

While Finance Secretary Carlos Dominguez III did not provide a number at his Bloomberg TV interview, he said “from what we’ve seen in May, where our unemployment and underemployment numbers have dropped, and the fact that we have created about 2.5 million new jobs over the last year, seems to be good signs for us.”

The government will report on the second-quarter gross domestic product (GDP) performance on Aug. 10.

Socioeconomic Planning Secretary Karl Kendrick Chua earlier said double-digit, or above 10 percent GDP growth, was “doable” from April to June, partly due to the low base in 2020 when the economy shrank by a record 16.9 percent year-on-year at the height of COVID lockdowns.

In its latest report on the employment situation, the state planning agency National Economic and Development Authority (Neda) noted that the 7.7-percent unemployment rate in May remained “relatively high” compared to most of the Philippines’ neighbors except for India which experienced a massive surge of COVID-19 cases” and posted a 9.9-percent jobless rate from April to May this year.

Neda said ramping up mass vaccination will be key to “allow the economy to further restore jobs and income while reducing virus transmission.”

Dominguez said that on top of the 30 million COVID-19 vaccine doses which arrived to date, 70 million more doses will be delivered in the third quarter, plus 55 million by the fourth quarter.

“That’s certainly enough to vaccinate 100 percent of our adult population. That is our primary method of fighting this” pandemic, Dominguez said.

He said any possible future surge in infections, like those happening abroad due to the more contagious Delta variant, will be contained by localized lockdowns.

Dominguez said the Philippines was expected to return to pre-pandemic economic output and growth by late 2022 or early 2023.

In a report on Wednesday, debt watcher Moody’s Investors Service projected the Philippines’ real GDP growth at 5.8 percent this year, below the government’s target band.

Moody’s said the return to GDP growth, which will reverse 2020’s worst post-war recession when full-year output contracted by 9.6 percent, would be “supported by an improvement in consumer spending and investment underlined by fiscal support from the government.”

Dominguez said the recent peso depreciation, where the domestic currency crossed the 50:$1 mark, was a sign of economic recovery.

“If you take a look at the entire pandemic period, it [the Philippine peso] actually strengthened,” Dominguez said.

“The recent drop in the value of the peso is to be expected as our economy opens and there is more demand for dollars as we import more,” Dominguez said.

“That is a natural reaction, and we think that the market is reacting properly to the signals that are going on, and the signal essentially is that there is recovery along the way, and it’s reflected in the increase in demand of dollars for imports,” he said.

TSB