THE National Economic and Development Authority (NEDA) said the economy is projected to return to its pre-pandemic growth track by this year, aided by laws liberalizing investment in several industries.
In a statement on Sunday, Socioeconomic Planning Secretary Karl Kendrick T. Chua said the easing of restrictions governing foreign investment in industries like telecommunications, retail and railways is expected to drive a wave of interest from overseas, where investment interest has long been deterred by the foreign ownership caps of 40% set in the Constitution for many industries.
Gross domestic product (GDP) grew by 5.7% in 2021, following a contraction of 9.5% in 2020. The government is targeting a growth of between 7% and 9% this year.
On April 29, Mr. Chua said that “Without a doubt, the pandemic and its adverse economic impacts are indeed testing the Philippine economy like never before. But unlike past crises, the Philippines has solid fundamentals to address this crisis.”
“It is very important at the outset to have a strong macroeconomy so that you have enough buffers and enough resources to withstand any shocks, and you can concentrate on improving the welfare of the people,” Mr. Chua added.
“In the final months of the Duterte administration, we are vigorously pursuing the economy’s full recovery to restore jobs and bring more people out of poverty,” Mr. Chua said. “Executive Order (EO) No. 166, signed a few weeks ago, fully opens the economy, and we are working on getting tourists back (and) getting travel back to as normal as possible,” he said.
The government’s approach to reviving the economy centers on accelerating the vaccination program, reducing restrictions on foreign and domestic travel, and fast-tracking digitalization.
Mr. Chua specifically cited amendments to the Retail Trade Liberalization Act, the Foreign Investment Act, and the Public Service Act, all of which reduce foreign ownership restrictions.
The amended Public Service Act now allows 100% foreign ownership in public utilities, which includes telecommunications, domestic shipping, railways, subways, airlines, expressways, tollways and airports.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion projects full-year GDP growth at around the 5.8% mark, below the goal set by economic managers for this year.
On the other hand, he expects first-quarter growth to come in at 5.5%, a forecast he called “robust,” given the contraction of 3.8% in the year-earlier period.
“With so much uncertainty all over, it is very difficult to determine if government will hit its 2022 growth target,” Mr. Asuncion said.
He said that external headwinds, including the Russia-Ukraine war, China’s economic slowdown, and a hawkish US Fed “can weigh down on overall economic growth especially as the Philippine economy is yet to return to a pre-Covid economic growth trajectory.”
Mr. Asuncion said that the reforms Mr. Chua highlighted may not start showing up until long after the administration steps down. — Tobias Jared Tomas