BSP sees positive Q2 economic growth
THE Bangko Sentral ng Pilipinas (BSP) EXPECTS THE PHILIPPINE ECONOMY TO fiNALLY post a positive growth in the second quarter of the year.
“As to the trajectory of growth, we expect this to turn positive beginning in the second quarter of the year. Again, mostly due to positive base effects, but ... going forward it is likely to be supported by the implementation of key pieces of legislation,” BSP Deputy Governor Francisco Dakila Jr. said in a press briefing following the announcement of the central bank’s latest monetary policy setting on Thursday.
Dakila said the newly signed the Republic Act (RA) 11534 or the “Corporate Recovery and Tax Incentives for Enterprises (Create) Act,” and the RA 11523 or the “Financial Institutions Strategic Transfer (FIST) Act” will impact growth starting in the second quarter of the year and well into 2022.
Signed into law last March 26, Create reduces corporate income taxes immediately. The law also modernizes fiscal incentives by making them performance-based, targeted, time-bound and transparent.
It is likely to boost the country’s gross domestic product (GDP) by up to 1 percent of per year, according to an analyst.
FIST, on the other hand, was signed last February 16, to provide a legal framework and tax incentives for banks and other financial institutions to transfer their nonperforming assets to special-purpose firms, called FIST corporations or FISTCs. It covers assets that have become nonperforming on or before Dec. 31, 2022.
The Philippine economy stayed in recession in January to March this year as the GDP contracted by 4.2 percent.
Besides the factors cited by Dakila, BSP Governor Benjamin Diokno has said that the domestic economy would continue to improve in the coming months with the help of the government’s targeted fiscal measures and the continued implementation of its vaccination program for the coronavirus disease 2019.
Improved international opportunities should also help boost domestic economic activity, he added.