FINANCE Secretary Carlos Dominguez III said the third-quarter Gross Domestic Product (GDP) growth of 7.1 percent puts the Duterte administration on target of expanding the economy by at least 7 percent in the short and medium term to generate enough resources for its priority agenda of drastically reducing poverty and creating enough jobs for Filipinos.
In a statement, Dominguez said last quarter’s growth was apparently driven in part by the onset of the Duterte presidency’s strong spending on infrastructure and the recovery of the agriculture sector from the prolonged El Nino-induced drought, and means there will be no letup in its commitment to spend big on urban and rural infrastructure as a growth driver as well as on human capital and social protection, to guarantee sustained high—and inclusive—growth.
He said the government needs to move quickly its fiscal reform package—topped by the proposed Comprehensive Tax Reform for Acceleration and Inclusion Act that the Department of Finance (DOF) already submitted to the Congress last September—to create enough buffer that would shield the economy plus the poor and other vulnerable sectors from the market volatilities mainly triggered by external factors.
“To keep the economy on its high—and inclusive—growth path, the government will pursue with vigor its fiscal strategy of improving budget efficiency and transparency and reforming tax policy and administration,” Dominguez said, “as a way to raise the P1 trillion in additional annual investments that are needed in infrastructure, human capital and social protection to transform the Philippines into a high middle-income economy by 2022 and a high-income one by 2040.”
“We need to raise sufficient revenues to (1) close the infrastructure gap that has for long undermined our economy’s global competitiveness, and (2) ensure the financial sustainability of our accelerated spending on human capital and social protection that are necessary to drastically reduce poverty and shield the poor and other vulnerable sectors from external shocks and the initial impact of the government’s reform agenda,” he said.
Dominguez was reacting to today’s announcement by the National Economic and Development Authority (NEDA) that the GDP grew by 7.1 percent over the July-September 2016 period.
According to NEDA, the figure, which covers the first three months of the Duterte administration, is higher than the GDP growth of 7.0 percent in the second quarter, and is an improvement on the 6.2 percent GDP growth recorded in the same period last year.
Pernia said that compared to other major Asian emerging economies who have released their GDP figures, “the country recorded the fastest growth in the third quarter of 2016, trailed by China (6.7 percent), Vietnam (6.4 percent ), Indonesia (5.0 percent ), and Malaysia (4.3 percent).”
NEDA director-general Ernesto Pernia said the “current quarter’s economic growth performance beats the market expectation of a 6.8 percent GDP growth and bolsters the likelihood of attaining the government’s target of 6.0 to 7.0 percent for the year.”
“This brings real GDP growth for the first three quarters of 2016 to 7.0 percent relative to the 5.9 percent growth in the same period a year ago,” Pernia noted.
“By industrial origin (production or supply side), the faster economic growth was driven mainly by the services sector (6.9 percent from 8.3 percent in Q2 2016 and 7.2 percent in Q3 2015)) and the industry sector (8.6 percent from 7.1 percent in Q2 2016 and 5.8 percent in Q3 2015). Worth noting is the recovery of the agriculture sector from the prolonged drought brought by the El Nino phenomenon which already dissipated in Q3 2016,” he added.
Dominguez said the government will have to invest in programs that will transform the economy from a consumption- to an investment-driven one, and at a much higher level from our current investment rate of 20 percent of GDP, so we could be on the par with our more vibrant neighbors that invest between 30 percent and 40 percent of their respective GDPs.
Alongside investing in infrastructure, human capital and social protection to sustain the economy’s growth momentum and attack poverty, Dominguez said the Duterte administration will also remain focused on other urgent measures such as fully implementing the Reproductive Health (RH) Law, modernizing agriculture to pull down food prices while increasing farmers’ incomes, and leveling the playing field for micro, small and medium scale enterprises (MSMEs).
Dominguez recalled that at the start of the new government, it put in place at once a 10-point socioeconomic agenda that will enable President Duterte to deliver on his electoral mandate to sustain the growth momentum and make it truly inclusive over the next six years by spreading its benefits to all sectors across all regions.