NextGen Day

Factors supporting a continued economic recovery this year, such as higher government infrastructure expenditure, are plenty, according to an analyst, especially after the economy achieved another improvement in the fourth quarter of 2021.

In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said: “bright spots” for the domestic economy this year include the resiliency of overseas Filipino workers (OFW) remittances, import and export recovery, pre-pandemic levels of foreign direct investments (FDIs), near-pre-pandemic levels of manufacturing prints, and a pre-pandemic low unemployment rate.

“In the future, increased infrastructure spending, including the “Build, Build, Build” program, will create more jobs and business opportunities for contractors and others in the supply chain of various infrastructure projects, and will serve as a major pillar of the economic recovery program, assisting in the achievement of the GDP (gross domestic product) growth target,” Ricafort said.

According to the Philippine Statistics Authority (PSA), the country’s GDP increased by 7.7% from October to December last year, up from the previously corrected 6.9% and -8.3 percent for the same period last year.

According to Ricafort, government spending increased 7.4% year over year in the fourth quarter of 2021, “partly reflecting the greater growth in infrastructure expenditures in previous months,” according to PSA statistics.

In the same period, he noted, imports increased by 13.7 percent, exports by 8.3 percent, consumer expenditure by 7.5 percent, and investments by 12.6 percent.

According to Ricafort, these values are primarily up due to low base effects.

However, he expects the domestic economy to grow by 6 to 6.5 percent this year, bolstered by the economy’s continued reopening, a nationwide increase in vaccination rates, and the influence of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

“So far for the next years,” he said, the CREATE law is the country’s largest stimulus program.

The Bangko Sentral ng Pilipinas (BSPsustained )’s accommodative policy stance, which keeps domestic interest rates low and increases demand for loans to finance investments, is another good for the domestic economy, Ricafort added.

“However, since the pandemic began in 2020, persistent restrictions on international visitors and face-to-face schooling have been missing components of the recovery tale, partly due to Omicron variant worries,” he noted.

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