6% GDP Growth Not Bad Versus Rest of Asia

The Philippine economy may not have a stellar performance this year, given the unimpressive figures in the first two quarters of 2019. But I believe this is not a disappointing turn of events compared with where the rest of Asia’s economy is headed.

The other economies in Asia are not performing that spectacular either. The prolonged trade war between the United States and China, the uncertainty of Brexit, unpredictable oil prices in the world market, and the continued geopolitical tensions in the Middle East have posed a challenge to the economies of Asia and the Philippines.

I have to admire Finance Secretary Carlos G. Dominguez III for keeping a positive tone on his assessment of the Philippine economy. The government, according to Dominguez, is maintaining a fighting growth target of at least 6 percent this year to realize President Duterte’s goal of lowering the poverty incidence to 14 percent by 2022, and creating more job opportunities for Filipinos.

A 6-percent growth in the gross domestic product this year, or slightly below it, is respectable. When viewed against the rest of Asia, the government’s fighting growth target is not bad at all. Most of our Asean neighbors were, in fact,  expanding below 4 percent. Only Vietnam grew at a faster rate than we did in the previous quarter.

Moody’s Investors Service has a more conservative estimate. It sees the Philippines expanding by “just” 5.8 percent in 2019, given the less vigorous growth in the first and second quarters. But the rating agency considers the Philippine growth rate still one of the fastest in Southeast Asia.

So, how will the Philippines fare against its neighbors in Southeast Asia? Moody’s expects the Philippine economy to grow faster than the 0.5 percent of Singapore, 4.4 percent of Malaysia, 2.7 percent of Thailand and 4.9 percent of Indonesia. Vietnam is seen growing the fastest in Southeast Asia at 6.7 percent.

The global debt watcher said the Philippine economy would grow faster at 6.2 percent in 2020, outpacing the 4.3 percent of Malaysia, 3.1 percent of Thailand, 1.2 percent of Singapore and 4.7 percent of Indonesia. The Philippines will also grow faster than China’s 5.8 percent next year.

Dominguez, meanwhile, remains upbeat on the economy despite the blip in the first two quarters. A spending catch-up plan drawn up for the year and the timely passage of the 2020 national budget, he said, would help the government achieve the 2019 GDP growth target of 6 percent.The economy grew 5.5 percent in the first semester, below the target range of 6 percent to 7 percent for the whole year.

He is confident there won’t be a repeat of the delay in the approval of the 2019 General Appropriations Act, citing a much better working relationship this time between the Executive and Legislative departments. The leaders of both the Senate and the House of Representatives are now meeting every month to monitor the progress on the budget and the 25 priority bills enumerated by President Duterte in his fourth State of the Nation Address, which include the four remaining tax-
reform packages.

Dominguez said the swift congressional approval of the remaining packages of the Comprehensive Tax Reform Program and other economic reform bills to further open up the domestic economy would be crucial for the Duterte administration to achieve its target of achieving high and inclusive growth and transforming the country into an upper-middle-income economy ahead of schedule.

Keeping both Congress and the Executive department in sync with each other will ensure the attainment of these goals.

Further reforms to open up the economy and attract more foreign investors will boost the bid of the Philippines to secure an “A” credit rating within the term of President Duterte.

I cannot agree more with Dominguez. The passage of the remaining tax-reform packages and other economic reforms, he says, “will help us secure the A-minus credit rating within the next two years and achieve our 14-percent poverty
target by 2022.”