Economy on verge of rapid expansion — DoF’s Dominguez

THE ECONOMY is poised to sustain its momentum this year with tax reform and steady dollar inflows providing broad-based and resilient drivers of growth, Finance Secretary Carlos G. Dominguez III said.

He also invited American businesses to keep investing in the Philippines, with the promise of robust domestic economic activity to be sustained over the coming years.

“We are on the cusp of rapid expansion and ready to evolve our economy towards investmentsled growth,” Mr. Dominguez said in a speech during the US-Philippines Society Business Forum yesterday.

“With increased investment flows, tax reform and massive investments in modernizing our infrastructure, we will definitely do better this year and the next.”

Mr. Dominguez remained confident that the Philippines will remain among the fastest-growing economies in Asia.

Gross domestic product ( GDP) expanded by 6.7% in 2017, well within the government’s 6.5- 7.5% target. The growth was driven by a 14.3% surge in public spending, largely on the back of infrastructure investments.

On the supply side, the industrial, services, and even farm sector posted increases year on year.

“All these numbers indicate the economy is gathering steam. We are confident the revenue reforms, sustained fiscal discipline, better spending efficiency and massive investments in infrastructure will enable us to escalate growth to between 7% and 8% in the near term,” Mr. Dominguez said.

“Infrastructure investments will likewise act as the stimulus for greater economic activity.”

The government will spend P1.1 trillion this year on priority infrastructure projects, representing one-fourth of the full-year national budget and equivalent to 6.3% of GDP. This forms part of the P8.44-trillion infrastructure spending plan until 2022.

Much relies on the implementation of the Tax Reform for Acceleration and Inclusion ( TRAIN) law which took effect on Jan. 1, from which the state is hoping to raise P82.3 billion in additional revenue despite lower tax rates for individuals.

Of this amount, 70% will be used to fund new infrastructure projects, while the remainder will be spent on social protection programs.

Preliminary data from Commissioner Caesar R. Dulay show that the Bureau of Internal Revenue was able to raise tax collections by 15% in January, with the additional tax on soda and sugary drinks raising about P2 billion in less than a month.

Despite this, Mr. Dominguez said inflation will likely find its way within the 2- 4% target set by the central bank, even as commodity prices picked up by four percent last month. Central bank officials view the price spike as “temporary,” as they believe that the one- off impact of inflation will eventually normalize.