Duterte gov't says 4-5% growth target still doable as economy reopens

MANILA, Philippines — The Duterte administration is confident it can hit its watered-down growth target as the economy is expected to start opening up in the final quarter of the year.

The third quarter gross domestic product (GDP) figure would be “lower” compared to 11.8% year-on-year growth in the preceding quarter because of harsh restrictions triggered by a surge in Delta cases back in August, Finance Secretary Carlos Dominguez III told Bloomberg in an interview on Wednesday.

However, Dominguez said much looser curbs in the final three months of the year would save the day.

“We’ve seen our cases drop and we’re beginning to open up our economy,” the finance chief said. “We expect our economy to start opening up this quarter.”

Following the emergence of Delta cases in the country, economic managers in August downwardly revised their growth target for this year to 4-5% from their previous projection of 6-7%. That was the second time the government trimmed their forecast and, on both occasions, the downward revisions were prompted by the same development: a return to hard lockdowns to arrest a renewed surge in infections.

On Wednesday, Malacañang announced that quarantine restrictions in Metro Manila — which typically accounts for a third of the country’s GDP — will transition to more-relaxed Alert Level 3 from October 16 to 31, as cases go down while vaccination rate picks up in the capital region.

This means food businesses in Metro Manila may operate in full capacity for take-out and delivery while dine-in services will be permitted at 30% capacity. Meanwhile, personal care service establishments like spas and salons can accommodate up to 30% of their venue capacity. 

“We’re sticking to that growth target and we think we’ll hit it,” Dominguez said.  “We believe that our economy is going to be robust as soon as restrictions on mobility are lifted. We did not lose infrastructure unlike in a war,” he added.

Sought for comment, Jun Neri, lead economist at Bank of the Philippine Islands, said hitting the state’s target for this year “looks achievable if momentum can really pick up in the fourth quarter”.

But despite improvements in overall mobility, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, believes an elevated inflation and high unemployment rate will likely make it difficult to stimulate consumption, a major growth driver. ING Bank forecasts GDP to settle at 3.7% in this year, lower than the government’s projection.

For Sanjay Mathur, chief economist for Southeast Asia and India at ANZ Research, achieving the 4-5% goal would depend on “the pace of reopening and it is important that it does not get reversed.”