The economy is in a strong position to hit the growth target of 6.5 percent to 7.5 percent this year after President Ferdinand Marcos Jr. ruled out any more COVID-19 lockdowns in the coming months, an economist said Monday.
In his first State-of-the-Nation Address (SONA), Marcos said the economic growth momentum “remained firm,” as demonstrated by the 8.3-percent growth in the first quarter alone.
Marcos emphasized the need to balance the health of the people and the economy.
“This is good for economic growth,” said Rizal Commercial Banking Corp. chief economist Michael Ricafort, who said lockdowns are costly, reduce tax collections, widen the budget deficit and increase the country’s debt.
With none of these concerns and good fiscal and debt management, the gross domestic product (GDP) growth target this year is achievable as the economy reopens toward greater normalcy versus some pockets of lockdowns last year, Ricafort said.
Business groups also welcomed the President’s promise of no more lockdowns and applauded his focus on food and energy security.
Finance Secretary Benjamin Diokno earlier said economic growth in the second quarter might be higher than the first quarter, with the absence of any COVID surges in the April-to-June period.
Last year, the economy managed to grow by 5.7 percent, a turnaround from the 9.6-percent contraction a year ago, despite the imposition of some alert level restrictions in the National Capital Region and other parts of the country to prevent the further spread of the pandemic.
The President, however, said there remained other risks to economic growth aside from the pandemic, such as the monetary policy tightening in advanced economies, higher global oil prices, and geopolitical tensions in Europe.
On July 8, the interagency Development Budget Coordinating Committee lowered its GDP growth projection this year to 6.5 percent to 7.5 percent from 7 percent to 8 percent previously, taking into account the domestic and external headwinds that may hurt the economy.
The adjustment was the second time the growth target range was lowered for 2022. The original target for this year was 7 to 9 percent before it was lowered to 7 percent to 8 percent.
Socioeconomic Planning Secretary Arsenio Balisacan earlier played down any significant impact to growth from the feared recession in the US and Chinese economies, saying the domestic economy gets its strength from domestic consumption.
Marcos, who concurrently acts as Agriculture secretary, urged Congress to pass a law that will lift the burden off agrarian reform beneficiaries who have loans due so they could concentrate on farm productivity.
Such a measure would ensure the success of the administration’s food security program, he said.
“The condonation of the existing agrarian reform loan will cover the amount of P58.125 billion benefiting around 654,000 agrarian reform beneficiaries and involve a total of 1.18 million hectares of awarded lands,” Marcos said.
He said an amendment to the Comprehensive Agrarian Reform Law of 1988 is needed to unburden the farmers from their loans and interest payments.
In the meantime, Marcos said he would impose a one-year moratorium on the payment of land amortization and interest payments.
At the same time, Marcos vowed to modernize Philippine agriculture, using new technology to expand the country’s fisheries, livestock, and poultry production.
“Science will be used to increase agricultural production. Even the post-production processing will be supported by the government,” he said.
To ensure immediate and direct aid to farmers, Marcos said the government will begin procuring farm input products such as fertilizer and make them available at an affordable price.
He also vowed to provide loans for farmers to help them secure an increased volume of good-quality products.
To speed up the recovery of the tourism industry, Marcos promised more international airports and road improvements that will make it more convenient for travelers to go around the country and provide them easier access to remote areas and undiscovered tourist spots.
“To boost our tourism industry, we will first and foremost make basic developments such as road improvements for easier access to tourism spots. We will also upgrade our airports and create more international airports to help decongest the bottleneck at the Manila International Airport,” Marcos said.
In ordering the Public Works and Tourism departments to improve the country’s infrastructure, Marcos cited the importance of tourism as an economic development tool and a job-generating industry that benefits the grassroots.
Based on the latest data from the Philippine Statistics Authority released on June 28, the tourism industry employed at least 4.9 million individuals in 2021, up from the 4.7 million figures in 2020. Still, the figures are way below the 5.71 million tourism jobs generated in 2019.
With borders virtually closed for the entire 2021, the country last year also only recorded a total of 163,879 foreign visitors. This is 89 percent down from the 2020 arrivals of 1,482,535.
Earlier, Tourism chief Christina Frasco said the Department of Tourism would further improve tourism policies to adapt to the changes brought about by the pandemic.
Upon her appointment, Frasco immediately embarked on “listening tours” to assess the challenges besetting the industry and among the issues raised by the stakeholders were accessibility to landlocked destinations, and lack of flights and airports, particularly in Luzon.
During those meetings, she promised to coordinate the concerns with the relevant government offices.
She also instructed the Tourism Promotions Board to reach out and provide assistance to local government units, especially those that still have underdeveloped destinations.
Meanwhile, Marcos directed the DOT to promote the Filipino brand, which the agency defines as “hospitality and service.”
“They say, each brand has a story. As for the Filipino brand, ours is deeply rooted in our rich cultural heritage and the tourism sector plays an invaluable role in the promotion of the Filipino brand,” Marcos said
“To foster the Filipino brand is to spark our sense of pride and reaffirm our strong sense of identity. It is time to welcome the rest of the world with an enhanced Filipino brand that is unique, attractive, and creative,” he said.
The Department of Transportation (DOTr) on Monday vowed to speed up the completion of various transport infrastructure projects, following orders issued by Marcos Monday.
In his SONA, Marcos ordered the department to go “full speed ahead” on its transport infrastructure projects.
“I will not suspend any ongoing infrastructure projects,” he added.
Marcos also said the government is committed to finish building the current portfolio of investments and approved railway projects.
These projects include the North South Commuter Railway Project, the Metro Manila Subway Project, LRT Line 1 Cavite Extension Project, the MRT Line 7 Project and the Common Station.
The P355-billion underground rail line is expected to serve 370,000 passengers daily in its first year of full operations.
Once completed and fully operational, the Metro Manila Subway Project will have 15 stations, including a terminal station at the Ninoy Aquino International Airport Terminal 3. The whole Metro Manila Subway is seen to be completed by 2024 or 2025.
The 147-km North-South Commuter Railway System, which will run from Clark in Pampanga to Calamba, Laguna, is expected to be completed by
Outside Metro Manila, Marcos said the government is pursuing the construction of the Mindanao Railway Project, Panay Railway Project, Cebu Railway System, the Cebu Bus Rapid Transit, the Davao High Priority Bus System, the Ilocos Norte Transport Hub and the El Nido Transport Terminal Project.
“Railways offer a great potential as it continues to be the cheapest way of transporting goods and passengers,” he added.
To help raise money for its projects, the government will seek to impose a tax on digital transactions, which Marcos said could generate P11.7 billion next year.
“Our tax system will be adjusted in order to catch up with the rapid developments of the digital economy, including the imposition of value-added tax on digital service providers,” Marcos said.
“The initial revenue impact will be around P11.7 billion in 2023 alone.”
These measures would include a tax on streaming service payments and other transactions.
The private sector applauded the President’s “no lockdown policy” that will allow the business community to continue the momentum of recovery.
The Management Association of the Philippines (MAP) acknowledged the President’s plan to provide fiscal incentives and assistance to micro, small and medium enterprises (MSMEs) while highlighting an earlier pronouncement of Trade Secretary Alfredo Pascual on the need to stop overregulating MSMEs.
But MAP president Rogelio Singson said he would have liked to see a stronger emphasis on stopping corruption.
Meanwhile, the country’s biggest group, the Philippine Chamber of Commerce and Industry (PCCI) said the President’s focus on food and energy security is most relevant today.
“We have to appreciate the global perspective of our President, which signifies him being a true global leader,” said PCCI chairman emeritus Francis Chua.
Philippine Exporters Confederation, Inc. (PhilExport) President Sergio Ortiz-Luis said the President’s forecast of the economy growing by 6.5 to 8 percent is a reasonable target.
The group also applauded the President’s proposed government rightsizing program.