December 10, 2021
Philippine economic growth this year could beat the government’s downgraded target, with fourth-quarter gross domestic product (GDP) likely to expand by at least 7%, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said. “I think it will be more likely that it will be more than 5% this year. Because right now, the year to date is 4.9%, so it stands to reason that the fourth quarter will be at least around 7%,” he said at an online briefing on December 9.
Foreign investment pledges went down during the third quarter of 2021 by 45.8%, latest figures from the Philippine Statistics Authority (PSA) show. The PSA reported ₱16.82 billion in approved foreign investments (FIs) from July to September, plunging from ₱31.03 billion in the same period last year.
The World Bank has raised its 2021 growth forecast for the Philippines to 5.3 percent— above the government’s goal— following the faster-than-expected third-quarter expansion, despite reimposed lockdowns to contain COVID-19’s Delta strain.
The government is set to tighten restrictions on travelers coming from France, which has been included in the “red list” countries, or areas deemed high-risk for COVID-19. Malacañang announced the Inter-Agency Task Force’s decision on December 8, which would be effective from Dec. 10 to 15. Passengers who have been to France within 14 days immediately preceding arrival in the Philippines from Dec. 10 to 12 shall be required to undergo facility-based quarantine for two weeks, acting presidential spokesperson Karlo Nograles said.
The Fiscal Incentives Review Board (FIRB) is being urged to provide investment promotion agencies (IPAs) more authority in granting tax incentives by increasing the capital threshold for projects requiring FIRB approval. Officials of foreign chambers said at a virtual briefing on December 7 that IPAs like the Philippine Economic Zone Authority (Peza) need to have more discretion when it comes to approving the investment. As such, this calls for another look at the current version of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
The Inter-Agency Task Force for the Management of Emerging Infectious Diseases has not yet named additional countries to be added to the "red list" amid the threat of the potentially more transmissible Omicron variant of COVID-19. IATF co-chairperson Karlo Nograles said a country that is up for potential red-listing must have reported a COVID-19 surge, with a significant increase in its two-week growth rate and average daily attack rate.
Finance Secretary Carlos Dominguez III said on December 8 the Philippines hurdled the obstacles presented by the COVID-19 pandemic, and its strengths remained intact throughout the existence of the global health crisis. Dominguez, speaking during the Kapihan sa Manila Bay forum, cited the country’s credit ratings that never experienced a downgrade since the start of the pandemic.
The Philippines was able to secure external financing support for the country’s coronavirus disease 2019 (COVID-19) response amounting to $23.4 billion, or P1.17 trillion. Finance Secretary Carlos Dominguez said the COVID-19-related external financing was secured from March 16, 2020 to December 7, 2021. Domingues said that of the said amount, $21 billion or P1.05 trillion, is for the general budget support to cover up for the drop in collections.
President Duterte has placed under price regulation at least 100 drug formulas and drug molecules that are being used to treat the leading causes of deaths in the country, including antibiotics, anesthetics, anticoagulants, anti-diabetic drugs. The maximum retail price (MRP) and maximum wholesale price (MWP) for 34 drug molecules and 71 drug formulas are contained in Executive Order No. 155 which the President signed on December 7. The price caps were recommended by the Department of Health after a review.
A total of of 13 million frontline and essential workers are now fully inoculated against Covid-19 after the three-day National Vaccination Days (NVD) last week, according to the Department of Labor and Employment (DOLE). Labor Assistant Secretary Dominique R. Tutay said NVD, which was held from November 29, 2021 to December 1, 2021, greatly boosted the number of vaccinated individuals under the A4 category.
The Philippine government will be asking the central bank for P300 billion in liquidity support next year, less than the previous loan after the country’s economic outlook improved, the Finance chief said. In a letter to the Bangko Sentral ng Pilipinas (BSP), Finance Secretary Carlos G. Dominguez III said the government would make the request as a provisional advance in the second week of January.
Monetary authorities are expected to hold policy rates steady until the second quarter next year or beyond as inflation continued to slow down in November, even if it settled beyond the government’s forecast for the month. The Bangko Sentral ng Pilipinas (BSP) expected the consumer price index to grow by 3.3 percent to 4.1 percent, but the Philippine Statistics Authority on Tuesday pegged inflation in November at 4.2 percent.
The economic team remains on the lookout for rising contingent liabilities to be borne by the government from public-private partnership projects (PPP), estimated to reach P456.2 billion this year. Socioeconomic Planning Secretary Karl Kendrick Chua said moves to amend the implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) Law will help minimize contingent liabilities arising from PPPs.
Trade and Industry Secretary Ramon Lopez said he was hoping the Senate would let the Philippines join a China-led “mega trade deal” before the end of the year, despite the opposition raised by agricultural groups.
In a recent forum, Lopez said he was hopeful the government would beat the Dec. 31 deadline for the country to sign up to the Regional Comprehensive Partnership (RCEP), which accounts for about 30 percent of the global economy.
Foreign companies doing business in the country said bringing down the corporate income tax (CIT) for large enterprises from 25 percent to 20 would not hurt the domestic economy, but will encourage more investors to locate in the country. This was the raised during a virtual press conference at the closing of the 10Th Arangkada Philippines Forum, an annual event organized by the Joint Foreign Chambers, where foreign businessmen called for the amendment of the relatively new CREATE Law, which lowers the CIT from 30 percent previously to 25 percent.
The Semiconductor and Electronics Industries in the Philippines Foundation Inc. (SEIPI) wants the next administration to reconsider and raise the threshold for investments being approved by the Fiscal Incentives Review Board (FIRB) and look at how the country can attract more foreign direct investments (FDIs).
The country’s factory output expanded for the seventh straight month, albeit at a slower pace in October, the Philippine Statistics Authority (PSA) reported on December 9. Preliminary results of the PSA’s latest Monthly Integrated Survey of Selected Industries (MISSI) showed factory output, as measured by the volume of production index (VoPI) grew by 24.7% year on year in October.
Inflation in Southeast Asian Nations (ASEAN) economies is set to hit its highest level in a decade next year, setting the stage for the start of monetary policy tightening across the region, according to Bank of America (BofA). Higher energy prices and a recovery in domestic demand and employment will drive inflation to an average of 2.7% in 2022, up from an estimated 2.2% this year, BofA Securities ASEAN economist Faiz Nagutha said at a media briefing on Thursday. Vietnam and Indonesia are set to see the steepest price growth.
Continued supply chain disruptions could pose an upside risk to inflation next year, the Bangko Sentral ng Pilipinas (BSP) governor said on Thursday. In a virtual briefing, the governor said the emergence of the Omicron variant may further have an effect on global supply chains as governments reimpose mobility restrictions to curb infections.
The Philippine government’s budget under Bayanihans 1 and 2 to help the labor sector was insufficient given the millions of jobs lost due to the pandemic, according to the World Bank. In a briefing on Thursday, World Bank Senior Economist for Social Protection and Jobs Yoonyoung Cho said the country’s budget, its scope, and targeting were limited when it came to the labor market needs during the pandemic.
The Bangko Sentral ng Pilipinas (BSP) monetary board believes that the local economic growth appears to be gaining “solid traction,” driven by improved mobility and sentiment, according to the highlights of its recent policy meeting published on December 9. The highlights of the meeting showed the BSP’s policy making body sees calibrated easing in quarantine protocols and progress in the government’s vaccination rollout as drivers in the pickup of growth in the economy.
The manufacturing output significantly slowed down in October, after several consecutive months of triple digit growth, data released by the Philippine Statistics Authority (PSA) showed. According to the latest results of the Monthly Integrated Survey of Selected Industries released yesterday, the Volume of Production Index (VoPI) posted a growth rate of 24.7 percent in October 2021. This is much slower than the 123.1 percent increase registered in the previous month. In October 2020, the VoPI dropped at an annual rate of 25.4 percent.
To finance their infrastructure outlays, 23 more local government units (LGUs) borrowed funds in November, jacking up LGUs’ cumulative 11-month loans to P89.8 billion. From January to November, the Department of Finance’s Bureau of Local Government Finance (DOF-BLGF) issued a total of 353 certificates of net debt service ceiling and borrowing capacity—documents that LGUs needed to submit to lending government financial institutions to show that they can repay debt.
Trade relations with the European Union is crucial to the Philippines as it navigates the challenges of recovering economically from the COVID-19 pandemic, experts said. In an online forum organized recently by Stratbase ADR Institute in partnership with the EU delegation, trade officials pointed out that the Philippines is the only ASEAN country given trade preference in the EU market’s Generalized System of Preferences Plus (GSP+), an important competitive advantage for the country.
Pivot to the EU [mention]
In the second session of the Stratbase ADR Institute’s 2021 Pilipinas Conference themed “Philippine Trade Relations in the Pandemic Context: A Part of EU-PH Trade and Sustainability Discussions 2021,” boosting trade relations with the European Union is seen as a great opportunity with the Philippines as the only ASEAN country given trade preference in the EU market to GSP+. Mr. Lars Wittig, President, European Chamber of Commerce in the Philippines (ECCP) for his part sees the Philippines improving when it comes to ease of doing business but lags in terms of attracting FDIs (Foreign Direct Investments).
The Philippines dropped nine spots in an annual global ranking of countries’ ability to attract and retain a skilled workforce, as the coronavirus pandemic disrupted the education of millions of young Filipinos. In the IMD World Talent Ranking 2021 report released on Thursday, the Philippines ranked 57th out of 64 economies, down nine places from 48th (out of 63) in 2020.