Despite the pandemic, the Philippines is back in business as the economy gradually reopens with health interventions set in place.
In an exclusive interview with Bloomberg, Finance Secretary Carlos G. Dominguez said a lot of “green shoots” are coming up which indicate signs of recovery despite the economic downturn.
“We do expect a big bounce back in our GDP growth next year”
Dominguez noted the smaller GDP (gross domestic product) contraction of 11.5 percent for the third quarter – significantly lower than the 16.9 percent decline recorded in the second quarter of 2020. On a quarter-to-quarter basis, the Philippines economy actually grew 8 percent in the third quarter compared to the 2nd quarter, the Finance Secretary said.
“Our housing market for residential homes is holding up well. Our foreign exchange reserves are the highest ever at $104 billion, and our peso has increased in value by 4.9 percent since the beginning of the year,” Secretary Dominguez added.
Although remittances from overseas Filipino workers – which hit a record high of $33.5 billion in 2019 – showed a decline of 2.5 percent compared, this was better than the expected decline of 5 percent or bigger, Secretary Dominguez disclosed.
The Cabinet official remains optimistic however that “the Philippines will see better performance in the last quarter of this year,” in line with expectations that an effective vaccine will be made available by the second quarter of 2021.
“That should inject a lot of confidence back into our country. And as a result of that, we do expect a big bounce back in our GDP growth next year,” he added. This echoed his statement during the recent virtual economic briefing dubbed as “Philippines: Pathway to Asia in a Post-Pandemic World” hosted by the Philippine Embassy in Washington, D.C. that the smaller GDP contraction indicates that the Philippine economy is on the mend.
“This is also a strong signal that the worst seems to be over for the country. The path is clearer to a strong bounce back in 2021,” he said, outlining the country’s “strong fundamentals, fiscal stamina and effective governance” as factors that will continue to make the Philippines a promising investment destination and a growing market for investors.
According to Secretary Dominguez, the Philippine job market has also started to pick up, with the unemployment rate slowly returning to where it was at the end of 2019 which was below 5 percent.
“The worst we were hit was in April but after that the jobs that were lost then have started coming back and we are slowly bringing down our unemployment rate to where it was at the end of last year, which was below 5 percent. So we are looking at that, and we think that the stimulus that will come out of our budget. The other measures that we are passing to reduce corporate income taxes, etc. are certainly going to put more money in the hands of the private sector and of course, to individuals,” the Cabinet official said.