Encouraging economic numbers and what they mean for 2020

The latest economic numbers are encouraging. The economy grew by 6.2% in the second quarter of 2019, higher than the 6.0% growth in the same quarter last year, recovering from the 5.5% in the first quarter, off the delay in the passage of the national budget by the previous Congress.

Analysts note that our growth was consumption-led, buoyed by inflation falling to a mere .8%, down further from the .9% achieved last month. The effects of cheaper retail rice prices stemming from the implementation of the Rice Tarrification Law drove food costs down. Government spending is also increasing, helping boost the economy after the budget delay.

The impressive third quarter figure brings growth for the first three quarters of 2019 to 5.8%, and sets the stage for the desired 6% growth by the end of the year. Contrast this with some of our more affluent neighbors that have predicted a drop in their growth numbers.

Thus, with the 6.0% growth rate possible despite the global economic slowdown, our economy’s performance remains consistent and at par with Asia’s stars, earning not only the interest of the investor community, but trust in the economy’s ability to continue growing despite the challenges. Like you, they will want to be where the growth is in an uncertain world.

So comes the tough question. What else do we need to keep this economy strong in 2020?

Lower corporate income taxes for one, removing us from having ASEAN 6’s highest corporate income tax rates, thereby releasing more income for reinvestment and business expansion.

On the horizon, the proposed CITIRA law promises good dividends for the backbone of our economy, the small and medium businesses, since their tax rates will be slashed by almost a third. Likewise, as the bill’s benefits and limitations get clearer, worries of other investors are settled.

Boosting infrastructure further is another measure that needs acceleration. The country’s economy is structured like an uneven pie, with Luzon enjoying the lion’s share of infrastructure and other advantages that make it an investor beehive, allowing it to produce more than half our country’s GDP. Its important therefore, to spread this wealth by creating opportunity elsewhere, especially where local economies, like

Mindanao, are poorer. Poverty will decrease further.

Next, a real boost to agriculture needs to happen. Agriculture picked up on growth to 3.1%, a significant increase compared to flat performance at the same time last year. William Dar’s agenda needs to kick in to deliver the benefits of technology and empower our farm sector. Strong agriculture often creates more stable food prices. For consumers, lower food expenditure is allows consumption of more things that boost the economy.

From 2018 to 2019 many reforms were enacted to boost the economy, such as the Ease of Doing Business Law, the revisions to the corporation code, new tax reforms, the Innovation Act and the Start up Law, among many things that took years for previous administrations to shepherd through Congress. Full implementation of these measure is expected in

2020.

These, among other other economic measures, are meant to unleash economic energy and spread the growth and build the new Filipino middle class.

As these socio economic reforms have been achieved, better implementation will be necessary next year for us to feel their full benefit. We cannot allow the bureaucracy to drag its feet on these vital measures. We also cannot allow useless political noise to sap our attention away from building our economy.

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