November 09, 2021
ECCP at Work
The Philippine economy once again grew in the third quarter, even with the return of stricter quarantine rules later in the period, the Philippine Statistics Authority reported. National Statistician Dennis Mapa said economic output expanded by 7.1% from July to September, quicker than the 11.6% plunge in the same period last year and the 12% growth registered in the second quarter.
The better-than-expected growth in Education, Financial Services, and Construction prompted the Philippine Statistics Authority (PSA) to revise the country’s second quarter economic performance. PSA disclosed that second quarter GDP grew 12 percent, 0.2 percentage points higher than the initial estimate of 11.8 percent. The data showed the Education sector saw the highest upward revision to 12.6 percent from the initial estimate of 10 percent, followed by Construction to 27.1 percent from 25.7 percent and Financial and insurance activities to 5.2 percent from 4.2 percent.
The Philippines has detected a case of a COVID-19 variant formerly called Kappa that was first reported in India and another case of the variant first recorded in Mauritius. The B.1.617.1 variant, a sublineage of the Delta variant first detected in India, is classified as a variant under monitoring by the World Health Organization beginning September 20, Health Undersecretary and spokesperson Maria Rosairo Vergeire said. It was previously classified as a variant of interest, she added.
The Philippine economy possibly grew in the third quarter of this year but at a milder pace than the previous three months with quarantine measures tightening anew, according to analysts. CNN Philippines polled 14 economists on the country’s economic performance during the July-September period, with forecasts ranging from 3.5% to 10.4%. The projections averaged 5.2% — a big leap from -11.6% posted the year before but easing from the preceding quarter's 11.8% rise.
Philippine exports and imports rose in September amid a pickup in global economic activity. The value of exports increased by 6.3% year on year to $6.68 billion, better than 3.4% a year earlier, the Philippine Statistics Authority (PSA) said in a report, citing preliminary data. The value of imports also rose by a quarter to $10.67 billion from a year earlier, reversing a 9.9% decline a year ago. The September export and import figures resulted in a trade deficit of $4 billion, wider than $2.27 billion a year earlier and the revised trade deficit of $3.51 billion in August, the PSA said.
The Philippine Economic Zone Authority (PEZA) reported a 25-percent decline in investments to P51 billion as of the end of September from a year ago. Plaza attributed this to the continued lockdowns that hampered mobility. As of September 2020, PEZA registered P68 billion in investments. Plaza also reported 90 percent of all PEZA companies are now operational with manufacturing registering a high of 95 percent and the business process outsourcing at 84 percent.
Agriculture production slumped 2.6 percent in the third quarter of the year, pulled by the crops, livestock and fisheries subsectors, data from the Philippine Statistics Authority showed. Farm output fell 2.5 percent in the first nine months despite a 5.2-percent increase in value at current prices to P446.46 billion from the previous year’s level.
The economy of the Asia-Pacific Economic Cooperation (APEC) region is expected to grow by 6 percent this year and will settle at 4.9 percent in 2022 in anticipation of the unwinding of fiscal and monetary support measures. According to the latest APEC Regional Trends Analysis (ARTA), the Asia-Pacific expanded by 8 percent during the first half of 2021 following a 3.7-percent contraction in the first half of 2020, as noted in a written statement issued by the Policy Support Unit. However, growth among member economies continues to diverge, and uncertainties remain substantial.
The distribution of COVID-19 booster shots and third doses may begin before Nov. 20, vaccine czar Carlito Galvez, Jr. said, but it is still subject to the release of protocols from health authorities. He said they are awaiting the guidelines from the World Health Organization's Strategic Advisory Group of Experts on Immunization and from the Department of Health. Amendments to the emergency use authorization for third doses and booster shots are also pending with the Food and Drug Administration.
The Philippines has fallen behind in economic integration in the Asia-Pacific region as it registered the poorest performance in an index measuring 17 economies’ performance in 2019. The Pacific Economic Cooperation Council (PECC) in its State of the Region Report 2021-2022 said the Philippines’ integration performance “still has the biggest gap behind the regional average, and its convergence ranking remains the lowest amongst all 17 economies in both 2015 and 2019.”
Establishments have been reporting 50 to 80 percent of their pre-pandemic transactions and sales during the first weekend of the Alert Level 2 in the National Capital Region, an indication of their recovery, according to Trade Secretary Ramon Lopez. But while Lopez cites government data that the remaining 100,000 of the 1.8 million workers displaced since the imposition of the enhanced community quarantine in March have gone back to work, a public-private goal of creating 1 million jobs by the end of 2021 will not be met in time.
The Bureau of Immigration (BI) gave assurance that it would increase the number of personnel manning international airports once the country opens its borders to foreign tourists. In a statement, BI Commissioner Jaime Morente said that with the lower number of COVID-19 cases in the country, they anticipate that the country would soon open its borders to foreign tourists. The Department of Justice (DOJ) is also expected to appoint 195 new Immigration officers to be hired and deployed within and outside Metro Manila.
The Senate adopted a resolution on November 8 concurring in the ratification of the Convention on Temporary Admission, paving the way for the Philippines’s joining in the so-called ATA Carnet system that greatly eases the duty and tax burdens, and simplifies Customs processes for professionals, business people and athletes bringing in their work equipment or samples into other countries.
Sen. Juan Edgardo Angara said a big number of amendments will be introduced in the proposed P5.024 trillion national budget for next year, particularly the government’s response to the pandemic and other health-related interventions. Aside from the pandemic response, Angara said the other amendments will be about salaries, benefits, and allowances of health care workers; additional funds for the purchase of vaccine boosters; improving the country’s health facilities, and funding the Medical Scholarship Law, among others.
Central banks in the region vowed to continue promoting green bond investments across the Association of Southeast Asian Nations (ASEAN) through the Asean Bond Fund. IHS Markit has decided to make adjustments to the rules of the Index to promote the inclusion of green bonds. The adjustments include setting the definition of green bonds, setting a lower minimum outstanding notional threshold for subsovereign green bonds issued in different markets, and changing the subsovereign issuer limit to 10 percent per issuer in each single market index, from the current limit of 5 bonds per issuer.
With its inclusion in Congress’s top agenda, the House Committee on Ways and Means created a technical working group (TWG) to craft a substitute bill reducing fuel excise taxes imposed under the Tax Reform for Acceleration and Inclusion (TRAIN) Law. During the briefing of the committee, Albay Rep. Joey Sarte Salceda, the panel chairman, said the proposal will completely suspend excise taxes on diesel (from P6/liter) and kerosene (from P5/liter) from December 1, 2021 to June 1, 2022, while reducing excise taxes on gasoline by as much as P3/liter.
The Department of Finance (DOF) remained confident that the country’s macroeconomic fundamentals are strong enough to support the economy’s recovery from the pandemic. In its latest economic bulletin, DOF Chief Economist Gil Beltran said the current account in the balance of payments moved to a deficit of $1.2 billion or 0.7 percent of GDP in the first six months of 2021. This was due to imports and exports posting double-digit growth of 23 and 10.3 percent, respectively. This level of growth indicates strong economic recovery.
The Philippines and more than 40 other countries have agreed to a deal seeking to phase out the use of coal-fired power. The Department of Energy (DOE) said the Philippines participated in the UN Climate Change Conference of the Parties (COP26) in Glasgow where it affirmed its commitment to shift away from the world's dirtiest fossil fuel. In 2020, the government declared a moratorium on new coal-fired power plants. The DOE targets to make renewable energy account for 35% of the Philippine energy mix by 2030, and 50% by 2040.
The House of Representatives will prioritize the ratification of the ₱5.024 trillion national budget for 2022 as sessions resume on November 8. It is committed to ensure that the budget bill, which is focused on getting the Philippines back on the road towards full recovery from the COVID-19 crisis, reaches President Duterte’s desk before the year end. The lower chamber approved on third and final reading its version of the 2022 General Appropriations Bill (GAAB) last September 30 and was transmitted to the Senate on October 25. The upper chamber will start its plenary debates on the national budget on November 8. Based on the Senate Committee on Finance’s calendar, the target date for the third reading approval of the Senate version of the 2022 GAAB is on November 25.
If the Philippines were to achieve its universal access to water and sanitation goal in a decade, the government must infuse an additional ₱21.3 billion to as much ₱55.5 billion worth of funding to local water districts (LWDs). This was the primary finding in the report titled, “An Assessment of the Financial Sustainability and Performance of Philippine Water Districts” authored by Lawrence Velasco and released by the Philippine Institute for Development Studies (PIDS).