The country is expected to regain its growth momentum by the second half of 2021 as challenging economic recovery remains on the horizon, the chief strategist of an equity brokerage house said on Tuesday.
In a webinar of the German-Philippine Chamber of Commerce and Industry (GPCCI), Regis Partners Inc. chief strategist and co-head research Rafael Garchitorena said they are more cautious on the country’s economic growth this year but a better economy is expected by 2022.
“We are confident and we can get the momentum going in the right direction by the second half of the year. It might be a little bit late than everybody else but there’s a lot of reason to be optimistic for economic recovery,” he said.
Garchitorena said enacting the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill into law is a “big hope” for businesses as this would provide them a tax break which is retroactive from July 1, 2020.
However, this legislation would directly impact enterprises and a lot of trickling down is required for the poor to feel effects of the CREATE.
“But Covid (coronavirus) is hurting the poor. What will a corporate tax break would really mean for jeepney drivers? Nothing really. What will it do for the informal economy where there is no really income tax rate?” he asked.
Garchitorena added one of the key risks in the economic growth this year is the rising inflation.
In December 2020, the inflation rate settled at 3.5 percent.
“It’s bad for consumption especially with high unemployment and rising input costs,” he said.
Garchitorena said increasing oil prices, which is now close to pre-pandemic level, has pushed higher power rates and transportation costs. These are expected to impact the cost of goods and services.
“I hope inflation numbers would come later,” he said.
Garcitorena also said since the fiscal stimulus of the government is weaker compared to neighboring countries, it should push for reopening of economic activities and relaxing mobility restrictions.
He added the government should expand further the transportation sector and also make domestic travels easier.
On the other hand, Garchitorena said implementing the 2021 budget will stimulate economic recovery, with infrastructure spending expected to create more jobs for Filipinos.
“But I’m very certain that by this time next year, it’ll be a much rosier picture economically than today,” he added.
Source: Philippines News agency