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Economist backs reopening of economy to sustain growth

By Joann Villanueva

July 25, 2022, 8:45 pm

<p><strong>ECONOMIC RECOVERY</strong>. An economist supports the need to continue the reopening of the economy to further boost domestic growth. President Ferdinand Marcos Jr., in his first State of the Nation Address (SONA), vowed not to implement another lockdown so as not to hurt the economy anymore. <em>(Photo from RCBC)</em></p>

ECONOMIC RECOVERY. An economist supports the need to continue the reopening of the economy to further boost domestic growth. President Ferdinand Marcos Jr., in his first State of the Nation Address (SONA), vowed not to implement another lockdown so as not to hurt the economy anymore. (Photo from RCBC)

MANILA – Additional measures to reopen the economy, which was reiterated during the President’s first State of the Nation Address (SONA), will continue to back economic recovery and help address challenges brought by the pandemic.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort, in a reply to questions from the Philippine News Agency, said challenges brought by the pandemic will be addressed partly with the additional measures to open the economy, such as the continued vaccination drive against the coronavirus disease 2019 (Covid-19).

He said achievement of herd immunity “would be the more sustainable source of better economic recovery prospects in terms of allowing greater capacity for businesses/industries that entail more investments and employment, thereby would help solve many of the problems presented by Covid-19 in terms of continuity of more business operations.”

Ricafort said ensuring operations of businesses will also aid in boosting government revenues and “help narrow the country's budget deficit and, in turn, reduce the need for more government borrowings.”

He said programs laid out by the second Marcos government’s economic team are expected to improve the economy’s growth potential, adding the “the economic team members generally have the experience, expertise, credibility, and track record in terms of delivering the goals/priorities, as a good starting point/foundation.”

Ricafort said “the country has been fortunate to have good economic teams over the past 10-20 years” in terms of delivering economic and fiscal/tax reform measures, narrowing budget gap and reducing the share of debt to the country’s total output, and on the goal to increase domestic output.

“However, the peculiar challenge now is the large amount of debt incurred during the pandemic,” he said, adding the amount has reached around PHP5 trillion since 2020.

Ricafort said the volume of pandemic-related debt needs to be paid largely through higher government revenue and with the help of “more disciplined spending/other austerity measures; as well as faster economic/GDP growth to bring down the debt-to-GDP ratio, from the 17-year high of 63.5 percent in view of the international threshold of 60 percent.”

Economic expansion this year is seen to be driven by the reopening of the economy.

President Ferdinand Marcos Jr., in his first State of the Nation Address (SONA) on Monday said the government will not implement any lockdowns anymore because the economy cannot take another strict movement restriction anymore.

Ricafort said election-related spending, lower Covid-19 infections, and increased government spending specially on infrastructure, resumption of foreign tourism, and resumption of face-to-face classes are expected to boost the expansion of the domestic economy.

He said the economy is now back on track vis-à-vis its 6-percent level growth potential due in part to demographic dividend and continued reopening of the economy.

Economic managers have set a 6.5 to 7.5 percent growth target for this year.

As of the first quarter, economic growth, as measured by gross domestic product (GDP), rose by 8.3 percent. (PNA)

 

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