ERNESTO M. PERNIA, PhD
Socioeconomic Planning Secretary
Press Conference on the Performance of the Philippine Economy
for the Third Quarter of 2019
November 7, 2019; 10:00 a.m.
Hampton Conference Hall, Second Floor, Astoria Plaza, Pasig City
Our Partners from the Philippine Statistics Authority,
Colleagues in government,
Friends from the media,
Ladies and gentlemen,
A pleasant morning to all of you.
We are glad to share that after two quarters of deceleration, the growth of the Philippine economy surged to 6.2 percent in the third quarter of 2019. This brings the year-to-date economic growth to 5.8 percent, just slightly below the lower-end of the 6.0-7.0 percent full-year 2019 growth target of the government set by the DBCC.
This means that the Philippine economy will have to expand by at least 6.7 percent in the last quarter of the year to meet the low-end of the full-year target of 6.0-7.0 percent for 2019—a challenge that we are confidently taking on.
Compared with other major emerging market economies in the region that have already released their Q3 2019 GDP numbers, the Philippines likely ranked second behind Vietnam’s 7.3 percent but higher than China’s 6.0 percent, India’s expected Q3 growth of below 6.0 percent, and Indonesia’s 5.0 percent for the period.
The stronger growth in public spending in the third quarter contributed significantly to our Q3 performance. Some may be quick to say that the private sector is a timid participant in our economic growth. Nothing can be farther from the truth. We know that the private sector is the main driver of the economy, with the government providing an enabling policy environment and infrastructure. That is why we need to address infrastructure, logistics and regulatory bottlenecks.
Government is committed to speeding up the implementation of its programs and projects that were affected by the budget impasse and the election ban earlier this year.
Yesterday, the Investment Coordination Committee-Cabinet level and the Committee on Infrastructure approved the updated list of infrastructure flagship projects of the Duterte administration, subject to further refinements. We deem that these projects are more feasible, responsive to medium and long-term demands and challenges towards uplifting the quality of life of the Filipino people, especially those being left behind. Thus, we call on our colleagues in the government, the private sector, partner international organizations, and the citizenry at large to work together to overcome hurdles and ensure that these projects get completed on time, or at least started substantially.
Relatedly, the timely passage of the national budget plays a crucial role, as you already know. We welcome the approved validity extension of the 2019 fiscal program, as well as the passage of the 2020 proposed national budget at the House of Representatives. We hope that the passage of both measures will also be timely in the Senate.
For the remaining months of the year, the benign inflation outlook, and more upbeat consumer confidence, are expected to stimulate private consumption, especially with the nearing holiday season that has begun.
As we welcome the easing of inflation, we continuously monitor prevailing prices to ensure that they are reflective of current market situation. Ample supply of basic commodities should also be ensured to further boost domestic consumption.
Meanwhile, the expansionary monetary policy stance of the government is expected to encourage private investments. The Central Bank has already cut its key policy rates by a cumulative 75 basis points this year. It has also lowered banks’ reserve requirement by a total of 400 bps – including the recent 100bps reduction for thrift banks effective December 2019.
In the near term, we expect the agriculture sector to gain momentum on the back of relatively favorable weather conditions. The El Niño-neutral situation is likely to continue and only fewer typhoons are expected to occur until April 2020.
This is an opportune time to ramp up agricultural production, particularly of high-value crops, not to mention infrastructure construction. We note that the upbeat performance of the agriculture sector, growing by 3.1 percent in the Q3 from 0.8 percent earlier this year, was driven by increased production of corn, coconut and pineapple.
Moreover, we urge the Department of Agriculture and other concerned agencies to swiftly implement the programs and projects under the Rice Competitiveness Enhancement Fund. Perhaps, among the priority projects should be the provision of mechanical dryers, particularly in areas where we lack “solar drying” facilities. As the harvest season is ongoing, the government should continue to directly buy palay from local producers affected by the unprecedented decline in farm gate prices to help curb their losses.
To counter the risk of the spread of African Swine Fever, the government must continue to enforce its biosecurity measures. More stringent quarantine checkpoints, provision of disinfection facilities, and intensified anti-smuggling and meat inspection efforts are also needed.
On the external front, global growth projections of the International Monetary Fund further has been cut to 3.0 percent in 2019 and 3.4 percent in 2020. This is due to broad-based slowdown in industrial output, weaker external demand, and dampened investment and business sentiment, exacerbated by increasing trade and geopolitical tensions.
To withstand external shocks and promote growth over the medium term, our country must diversify products and markets through the establishment or improvement of new and existing trade relations with strategic partners.
We are also continuously pushing for the swift passage of the TRABAHO Bill and amendments to the Foreign Investment Act, Public Service Act, and Retail Trade Liberalization Act in order to reduce policy uncertainties. These can help encourage private investments and increase the efficiency of conducting transactions with agencies of the government.
Another bill that should be prioritized is the National Land Use Act as this will help better utilize, manage, and develop the country’s land resources.
The NEDA is currently updating the Philippine Development Plan during this the mid-term juncture with fine-tuned strategies needed to achieve the country’s priorities and targets. We will launch the PDP mid-term update this December.
Just to give a preview, the following are the emerging key policy reforms that we need to pursue over the next three years: (a) Remaining tax reform packages; (b) Budget Reform Bill; (c) Strengthening the Culture of Planning in Government; (d) Amendments to the BOT law; (e) Department of Water and Water Regulatory Commission; (f) Disaster Resiliency Bill; and the (g) National Quality Infrastructure.
As we can see, the Philippine economy has been steadily growing for the past three years. We expect to sustain this momentum in the following years and cement the Philippines’ standing as one of the fastest-growing economies in Asia.
We in the government remain committed to pass reforms and implement programs and projects, not solely for economic growth, but most especially for realizing the vision of providing every Filipino of a matatag, maginhawa at panatag na buhay.
Thank you and mabuhay tayong lahat!
– END –