With third quarter growth of 7.1 percent in gross domestic product, the country could well be on its way to achieving its dream of upper middle- income country (UMIC) status by 2022. With a UMIC, the creditworthiness improves and therefore more investments and loans can come our way.
BEFORE the pandemic struck in December 2019, the Philippines was already inching closer to its aspired status of upper middle income country (UMIC), so that its creditworthiness is fortified and more investments could come in.
But COVID-19 came and set back the timetable.
Now as the country attained in the third quarter this year a growth of 7.1 percent, economic managers are optimistic the UMIC goal by 2022 is within reach.
Undersecretary Rosemarie Edillon of the National Economic and Development Authority said that the country was forecast to reach its current status as a lower middle- income country supposedly in 2020 but the COVID hit.
Upper middle-income
Based on World Bank's current standards, an upper middle-income country has a per capita income of between $4,096 and $12,695. Thailand and Malaysia are Southeast Asian countries currently holding such status.
"Tingin namin, by 2022, mari-reach natin ang upper middle-income country. Ang ibig sabihin din kasi nito is patuloy na umaangat ang antas ng kabuhayan natin," Edillon explained in a public briefing.
"Malaking bagay itong pagiging upper middle-income country na ito. Malaking challenge talaga 'yung iba, it takes several decades para makarating," she noted.
Edillon said this could mean that the country could have a high credit rating, thus wider access to more capital.
Employment opportunities
Such status may also mean more employment opportunities and "higher income" for Filipinos.
"So mas matutulungan ang ating mga gustong mag-expand ng negosyo kasi mas magiging maraming available na capital sa kanila and then lesser ang cost of capital," she added.
"Kapag magiging mas marami ang investments na yun, mas marami ring pwedeng maging trabaho ng ating mga kababayan."
7.1 percent
The Philippine Statistics Authority, under NEDA, this week said the country's gross domestic product expanded 7.1 percent in the third quarter.
For the first three quarters of 2021, the Philippine economy’s average growth rate was at 4.9 percent, and it is on course to hitting the government’s full-year growth forecast range of 4 to 5 percent.
Edillon said because of this, the country could reach its "pre-pandemic level" of economy by the end of the year or the first quarter of next year, as the country accelerates COVID-19 vaccinations.
"Most probably, kung mahihigitan natin 'yung (if we can surpass the) target na 4 to 5 percent, then baka by the end of the year, makakarating na tayo sa ating pre-pandemic levels (maybe we can reach our pre-pandemic level)."
Fitch Ratings
Following a 7.1 percent growth in the third quarter, the Philippine economy's fourth quarter growth could also be better than expected, Fitch Ratings director of APAC Sovereigns Sagarika Chandra told ANC Thursday.
Chandra said the firm also revised upwards its 2022 forecast for the Philippine economy to 6.8 percent from 6.6 percent.
Contraction
In 2020 the Philippine economy contracted by 17 percent in the second quarter, and 11.6 percent in the third.
For the whole of last year, the economy contracted 9.6 percent, its worst performance since the end of World War 2, largely due to the impact of the COVID-19 pandemic and the mobility restrictions and business shutdowns that followed.
Metro Manila's last week shifted to Alert Level 2 amid the slowdown of new COVID-19 infections, allowing more businesses to reopen.
Contributors
The Philippine Statistics Authority said the main contributors to the July to September growth rate were wholesale and retail trade, repair of motor vehicles and motorcycles, manufacturing, and construction..
The Q3 growth rate exceeded forecasts from the private sector which ranged from 6.5 percent to 4.6 percent, and even the 6.2 percent forecast of the Bangko Sentral ng Pilipinas.
For the first three quarters of 2021, the Philippine economy’s average growth rate is now 4.9 percent, and it is on course to hitting the government’s full year growth forecast range of 4-to-5 percent.
Stronger growth
BSP Governor Benjamin Diokno said that the stronger than expected growth “increases the likelihood that the revised growth projection of 4 to 5 percent in 2021 would be exceeded.”
National Statistician Dennis Mapa also pointed out that the economy has yet to get back to its 2019 level.
Mapa said that in real terms, the country’s GDP in the first 9 months of 2021 was about P13.32 trillion, which was higher by 4.9 percent versus the first 9 months of 2020 which is P12.7 trillion.
But this was still below the country’s GDP in the first 9 months of 2019, which was P14.1 trillion.
“So comparing our 9 months 2021 performance versus the pre pandemic of 2019, we are still down by about 5.7 percent,” Mapa said.
Unexpected
Business groups meanwhile welcomed the unexpected news.
“The third quarter GDP growth was a pleasant surprise given the reimposition of ECQ and the typhoons which occurred during the quarter. It exceeded analysts’ expectations and bodes well for future growth, particularly with the easing of restrictions,” said the Management Association of the Philippines.
“We look forward to a much better GDP performance in the fourth quarter with the easing of quarantine restrictions and the increased consumer spending this Christmas Season,” said the Financial Executives Institute of the Philippines.
Nicholas Mapa, ING Bank senior economist said faster growth may give the BSP room to adjust rates in the first half of next year.
The BSP earlier said monetary tightening was unlikely this year as the risks of raising interest rates too early outweighed the risks of raising them too late.
“The Bangko Sentral Ng Pilipinas will continue to be patient with its accommodative monetary policy stance to support the economy’s full recovery,” Diokno said.
The economy is seen to lose some P41 trillion due to the pandemic in the long term, based on estimates from the National Economic and Development Authority.
But the economy could gain at least P3.6 billion per week with Metro Manila under Alert Level 2, Chua earlier said.
Tags: #UMIC, #GDPgrowth, #economicmanagers, #economy