November 9th, 2021
The Third Quarter GDP figures are relatively strong, considering the hard lockdowns in August. The strong construction sector growth of 23.8%, matched with very strong demand for imports indicates that there is momentum in capital formation. I expect businesses to intensify their investing and expansion activities by Q1 of 2022.
The Industry and Services groups showed robust numbers, at 7.9% and 8.2% respectively. As more areas gain higher vaccination levels, I expect the jobs recovered in these sectors to consolidate. Agriculture, as expected, contracted by 1.7% year-on-year.
I remain committed to helping increase the agriculture budget for 2022. One key element of the 2008 economic stimulus program under President Arroyo, which helped inoculate us from the worst impacts of the Great Recession, was agricultural support. I am convinced that growth and value-added in the agriculture sector will be a key driver of economic recovery.
I remain concerned about employment figures. Very little change in employment levels has been observed from April to September of 2021. This is despite growing vaccination rates across the board.
I remind all of a basic economic principle, however, that growth is a necessary, but not sufficient, condition for socioeconomic recovery. We need jobs and income recovery.
The vaccination rate in Metro Manila is now at around 63%, which is around the same rate as places like New York and California. Yet, job recovery remains tepid.
Earlier this week, I suggested the easiest points to strengthen job recovery.
First, we must fill in all government positions that remain unfilled for 2021. This is the most accessible lever of job recovery that the government can pull.
Second, jobs in the agriculture sector will remain anemic until December. Cash-for-work programs in rural areas will be critical during the present “dead season” or tiempo muerte.
Third, we must complete all infrastructure programs under the 2021 budget. The spillover effects of infrastructure will be critical to inducing a growth momentum for the economy.
Fourth, we must support growth sectors in their recruitment and training efforts. The Business Process Outsourcing (BPO) sector remains strong and growing. They will be key to employment recovery.
Fifth, government financial institutions (GFI) can be more aggressive with business loans as the economy becomes more favorable to new investments and entrepreneurial ventures.
The most important government intervention, however, will have to be economic stimulus. The conditions are ripe for expansive growth-inducing programs because there is growing economic activity to amplify government spending. If the government will be unwilling to fund a supplemental stimulus this year, at the very least it must identify 2022 programs that can be frontloaded and expedited for implementation at the start of the year.