Vaccine availability for Covid-19 is expected to restore consumer confidence and help boost the Philippine economy’s expansion in 2021.
Finance Secretary Carlos Dominguez III, in a recent interview over Bloomberg TV, said the economy was on a strong position at the onset of the pandemic and “green shoots” are now coming out after growth contraction in the last three quarters.
“We are having difficulty, of course, due to the contagion, with re-stimulating people’s demand. People are very cautious about getting sick and, therefore, are holding back on spending but we believe we are on the right track and we will see a better performance in the last quarter of this year,” he said.
Dominguez said if expectations are met for the Covid-19 vaccine availability within the first half of 2021, “that should inject a lot of confidence back into our country,” and consequently ”we do expect a big bounce back in our GDP growth next year.”
Growth, as measured by gross domestic product (GPD), in the third quarter posted a smaller contraction of -11.5 percent against the -16.9 percent in the previous three months. However, compared to last year’s figure, the latest print is 10% down.
Authorities said things are improving due in part to the continued easing of quarantine measures and the reopening of the domestic economy. Economic managers forecast this year’s GDP to remain in negative, at -5.5 percent, but expect a strong rebound of between 6.5-7.5 percent next year.
Dominguez said among the positive developments, to date, is the improvement of remittance inflows from overseas Filipino workers (OFWs), which posted negative growths from March to May and last August. In the first nine months of this year, remittances posted a contraction of 1.4 percent.
Monetary officials said remittances are expected to post a 2% contraction this year, a revision from the earlier forecast of -5 percent. “We are very happy our remittances from abroad are holding up. They have not declined as much as we have expected,” he added.
Dominguez said the domestic residential housing market “is holding up well;” foreign reserves posted its record-high US$104 billion as of end-September 2020; the peso has appreciated by around 4.9% against the US dollar to date; and the job market has improved.
“This big financial buildup has buttressed our country from the financial effects of the contagion so while we are seeing a drop in GDP growth. we are still in very good financial health,” Dominguez concluded.