Finance Secretary Carlos Dominguez III said Wednesday he expects “pretty good” gross domestic product growth in the second quarter, compared to the 4.2-percent contraction in the first quarter, as the improvement in the labor situation in May showed that the economy is on its way to recovery.
Dominguez, in an online interview with Bloomberg, did not provide any specific growth forecast for the period. “The numbers are going to come out on Aug. 10, and we think they’re going to look pretty good,” he said.
“But I’m not going to say exactly what they are now. I think, from what we’ve seen in May, where our unemployment and underemployment dropped, and the fact that we have created about two and a half million new jobs over the last year seems to be good science for us,” Dominguez said.
Dominguez expressed optimism that the second-quarter economic performance would give the needed momentum to achieve the government’s full-year GDP growth target range of percent 6 to 7 percent.
“We are going to have another meeting of our DBCC [Development Budget Coordinating Committee] shortly after we see the numbers on Aug. 10 to really look at what we’re going to have for the next seven or eight months,” he said.
The DBCC, composed of the heads of the Department of Finance, Department of Budget and Management and National Economic and Development Authority, on Monday kept the growth target at 6 percent to 7 percent for this year, 7 percent to 9 percent for 2022 and 6 percent to 7 percent in 2023 and 2024.
It said the intensified implementation of the prevent, detect, isolate, treat and recover strategy, along with the full vaccination of residents in high-risk areas, would help build consumer and business confidence, improve the health system capacity and prevent community transmission of the more deadly Delta variant of COVID-19.
Dominguez said the private sector would play a key role in the recovery of the economy in the months ahead. He said the Corporate Recovery and Tax Incentives for Enterprises Act—signed into law recently by the President—that reduced the corporate income tax rate from 30 percent to 25 percent for large companies and from 30 percent to 20 percent for the small and medium sized companies, would be a very strong fiscal stimulus to the economy.
The economy contracted by 9.6 percent in 2020, the worst since World War 2. In the first quarter, the GDP posted a lesser decline of 4.2 percent.
The Manila-based Asian Development Bank maintained its growth forecast for the Philippines at 4.5 percent this year and 5.5 percent in 2022, taking into account the economy’s gradual recovery from the global health crisis and the faster pace of vaccination against COVID-19.