Despite Omicron threat: 2022 growth goals within reach

The economy is still well-placed to grow within target this year as the Omicron variant is expected to be a risk to the economic outlook in the short term, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.

“Our position is that, despite the recent variant of the virus, we will hit our projected growth of 7-9%. So the variant, as it turned out, is mild and less lethal,” Mr. Diokno said at the 2022 virtual inaugural meeting of the Management Association of the Philippines.

“We hope that the variant will be gone by the middle of February or March. So that gives us confidence that we will hit our growth target of 7-9% this year, and 6-7% for the next two years,” he added.

Like other countries, the Philippines is experiencing an Omicron-driven surge. Active cases rose by a record 34,021 to 237,387 on Thursday, based on data from the Department of Health.

After the holidays, the government imposed tighter restrictions to curb the infection spread. Metro Manila and provinces seeing the surge were placed under Alert Level 3 until Jan. 15. This means businesses had to reduce their operations.

Economic managers earlier said the more restrictive Alert Level 3 in Metro Manila and nearby regions could cost P3 billion in losses to productivity contributions.

Government officials are keen on imposing granular lockdowns instead of total lockdowns that were implemented earlier.

Mr. Diokno is hopeful that because the Omicron is “mild and less lethal” and since it hit early in the year, its impact will not be long-lasting to the growth outlook.

“We hope that the variant will be gone by the middle of February or March. So that gives us confidence that we will hit our growth target of 7-9% this year, and 6-7% for the next two years,” Mr. Diokno said.

The last time the country saw an infection spike was in August, no thanks to the Delta variant. Despite this, the economy beat expectations as it grew by 7.1% in the third quarter, bringing full-year growth to 4.9%.

The Philippine economy contracted by a record 9.6% in 2020 due to having one of the world’s longest and strictest lockdown at the early stages of the pandemic.

Source: BusinessMirror

FDIs sustain strong growth in October

The Bangko Sentral ng Pilipinas (BSP) on Monday reported a 98.9-percent rise in the country’s foreign direct investments (FDIs) in October, bringing the country’s total FDI inflows above the P8-million mark.

FDIs to the country grew for the fifth consecutive month in October last year to hit $855 million from the $430 million in the same month in 2020. This marked a 98.9-percent rise year-on-year.

FDIs are investments made by foreign players to the Philippines in the hopes of long-term return. Since these are in the country for a longer term compared to their short-term counterpart, the foreign portfolio investments (FPI), FDIs usually create jobs for Filipinos and has a multiplier effect on the economy.

The BSP said the recorded increase in FDI net inflows in October 2021 was mainly on account of the 78.5-percent growth in non-residents’ net investments in debt instruments to $637 million from $357 million in October 2020.

Non-residents’ net investments in equity capital other than reinvestment of earnings likewise increased to $141 million from $1 million in the comparable month in 2020.

The notable expansion was traced to the improvement in equity capital placements by 80 percent to $154 million from $86 million; and the decline in equity capital withdrawals by 84.1 percent to $13 million from $85 million.

Equity capital placements during the month were sourced mainly from Japan, Singapore, and the United States. These were channeled mainly to the manufacturing; electricity, gas, steam, and air-conditioning; and real estate industries.

Reinvestment of earnings for the month amounted to $77 million, up by 7.1 percent from $72 million.

The strong FDI performance in October brought the 10-month FDI of the country to $8.14 billion, up 48.1 percent from the January to October period in 2020.

Rizal Commercial Banking Corporation (RCBC) economist Michael Ricafort said FDI data could still improve for November and December of 2021.

“For the coming months, FDI could still continue to go up amid better global economic prospects as some developed countries that are the major sources of FDI move towards herd immunity,” Ricafort said.

Source: BusinessMirror

One million workers displaced by closure of over 130K firms

More than a quarter of a million firms were deemed permanently closed between 2018 and 2021 and more than half of these firms closed during the pandemic, according to the Philippine Statistics Authority (PSA).

Based on the 2021 Updating of the List of Establishments Preliminary Results, some 259,707 establishments were tagged with permanently closed status. More than half or 53.5 percent of these firms ceased operation within 2020 to 2021.

This affected 1.052 million workers and more than a quarter of these workers are employed by firms based in the National Capital Region (NCR).

“The 2021 ULE was conducted generally to update the status and characteristics of establishments in the PSA’s List of Establishments [LE] and to provide information on the distribution of establishments and employment across areas and industries. The LE serves as the source of the sampling frame for all establishment-based surveys and censuses conducted by the PSA,” PSA explained.

Based on the data, out of the 259,707 firms that closed, nearly half or 124,699 establishments were closed in 2020 and 14,144 firms were closed in 2021. The closure of these establishments affected 499,375 workers nationwide in 2020 alone while another 66,071 workers were affected in 2021.

Of the firms that permanently closed between 2018 and 2021, PSA said 55,959 were based in NCR. The cities that posted the highest number of closed establishments were the City of Manila with 13,449 closed companies; Quezon City, 11,729; and Caloocan City, 6,810.

However, data showed 33,183 firms closed in NCR in 2020 alone. This was driven by the closures in the City of Manila involving 8,788 establishments; Caloocan, 5,455; and Quezon City, 5,430 firms.

In terms of employment, a total of 295,041 Filipinos working in NCR-based firms were affected by the closures. The cities with the highest number of affected workers were Quezon City at 75,238; City of Manila, 60,546; and Makati City, 30,930 workers.

Based on the preliminary results, more than 1.08 million establishments were in operation and generated 8.57 million total employment during the reference year.

Compared to the results of the 2018 ULE, the number of establishments increased by 7.7 percent while total employment declined by 5.2 percent.

NCR still hub

The National Capital Region (NCR) remained as the hub of business and industry with 201,080 establishments comprising 18.6 percent of the total number of establishments in 2021.

More than one-third (33.6 percent) of the total employment was generated by these establishments. Next to NCR are two adjacent regions, Calabarzon, and Central Luzon, with 160,056 (14.8 percent) and 137,528 (12.7 percent) establishments, respectively.

Calabarzon and Central Luzon also generated the next highest employment figures with 1.3 million and 0.84 million, respectively.

Source: BusinessMirror