Infrastructure spending continues

Factors supporting continued economic rebound this year, including increased government spending for infrastructure, remain abundant especially after the economy posted another recovery in the last quarter of 2021, an economist said in a report by Philippine News Agency.

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

“Going forward, increased infrastructure spending, including the “Build, Build, Build” program, creates more employment and business opportunities for contractors and others in the supply chain of the various infrastructure projects and would serve as the major pillar for the economic recovery program and would help achieve the GDP (gross domestic product) growth target,” Ricafort said.

The Philippine Statistics Authority (PSA) reported on Thursday that the country’s GDP rose by 7.7 percent from October to December last year from the previously revised 6.9 percent, and the -8.3 percent for same period last year. 

Citing the PSA data, Ricafort said government expenditure rose 7.4 percent year-on-year in the last quarter of 2021 “partly reflecting the faster growth in infrastructure spending in recent months.”

He said imports also grew by 13.7 percent year-on-year in the same period, exports by 8.3 percent, consumer spending by 7.5 percent, and investments, 12.6 percent.  

Ricafort said these figures were mostly up because of low base effects.

But he is optimistic about a 6 to 6.5-percent growth for the domestic economy this year, boosted by the continued reopening of the economy, the increase in the vaccination rate nationwide, as well as the impact of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

He said CREATE law is the country’s biggest stimulus measure “so far for the coming years.” 

Another plus for the domestic economy is the continued accommodative policy stance of the Bangko Sentral ng Pilipinas (BSP), which makes domestic interest rates low and encourages demand for loans to finance investments, Ricafort said.  

“(However, the) missing pieces of the recovery story, partly due to the Omicron variant concerns, include the continued restrictions on foreign tourism and face-to-face schooling since the pandemic started in 2020,” he added.