Colleagues in government, friends from the media, fellow Filipinos, good morning.
We are pleased to report that the Philippine economy strongly recovered in the second quarter of 2021. The robust performance is driven by more than just base effects. It is the result of a better balance between addressing COVID-19 and the need to restore jobs and incomes of the people.
Performance of the Economy
As reported by the Philippine Statistics Authority today, Philippine economic growth accelerated in the second quarter of 2021 to 11.8 percent from -17 percent in the same period last year. This is the highest GDP growth recorded since the fourth quarter of 1988.
On the production side, all sectors expanded except agriculture, which slightly contracted by 0.1 percent because of the decline in pork production. Meanwhile, the industry sector grew by 20.8 percent, and services by 9.6 percent, as we managed the COVID-19 risks better and eased quarantine restrictions.
On the expenditure side, total investment grew by 75.5 percent, driven by the near doubling of private investments growth at 94.9 percent. This points to improvements in business confidence as the economy learns to live with the virus.
Our policy to allow both public and private construction even during the enhanced community quarantine (ECQ) period last March and April 2021, shows that we can revive the economy while addressing COVID-19 infections. In particular, public construction expanded further by 49.7 percent, continuing the previous quarter’s growth of 25.3 percent. Private construction also grew by 19.1 percent, a reversal from the last quarter’s contraction of 37.2 percent. These resulted in an overall growth of 25.7 percent for the construction sector.
With improving consumer confidence, household spending growth also turned positive at 7.2 percent as millions regained their jobs and income sources in the first half of 2021.
Moreover, foreign trade substantially recovered with imports and exports growing at 37.8 percent and 27 percent, respectively. This strong rebound reflects increased domestic demand and the recovery of our trading partners.
Only government expenditure contracted, at -4.9 percent, primarily due to the high base effect from the roll-out of the largest ever emergency subsidies in the second quarter of 2020.
In summary, almost all sectors bounced back despite the imposition of the ECQ and the MECQ last April and May 2021. This is a clear indication that managing risks, instead of shutting down large segments of the economy, stands a far better chance of improving both economic and health outcomes.
To illustrate, unlike last year’s ECQ where we shut down around 75 percent of the economy, we had much more latitude this year. Most industries and services continued to operate. Public transportation also remained available. And workers were exempted from the curfew. These are supported by mobility data, which shows that visits to public transport stations and workplaces have strongly improved compared to last year.
The increase in economic activity has led to more Filipinos regaining their jobs and income. The recent labor force survey results for June 2021 showed that the economy generated an additional 2.5 million jobs compared to the pre-pandemic level, and the quality of employment has improved given the much lower underemployment rate.
Government Recovery Program
The significant improvement in almost all economic indicators highlights the gains from our risk-based approach to quarantines and our strong economic fundamentals. We will continue to accelerate the implementation of our three pillar strategy to achieve our growth and job targets. First is the acceleration of the vaccination program. Second is the safe reopening of the economy, while strictly adhering to public health protocols. And third is the full implementation of the recovery package.
On the health front, we have continuously increased our hospital, testing, and vaccination capacity and we are in a much better position to combat the spread of the Delta variant. We reiterate our call for everyone to cooperate with the government’s Prevent, Detect, Isolate, Treat, Reintegrate, and Vaccinate strategy.
The reimposition of ECQ in high-risk areas, including NCR from August 6 to 20, is our proactive response to address the spread of the more contagious Delta variant and preclude the return of more lockdowns down the road. During this period, we will further accelerate the vaccination program. We encourage everyone to use this ECQ period to get vaccinated, so we can safely reopen the economy once we have contained the spread of the Delta variant.
Our COVID-19 vaccination program is on track. We have been receiving a steady supply of vaccines from multiple sources. As of today, a total of 38.6 million doses have arrived in the country between February 28 to August 8, 2021.
Our local government units and partners in the private sector have shown a remarkable ability to administer the vaccines on a wide scale. Last August 5, the country recorded an all-time high of 710,482 jabs in a day. As of August 8, a total of 24.5 million doses have been administered, consisting of 13.1 million for the first dose and 11.4 million for the second dose.
For the remainder of 2021, we are expecting the arrival of over 148 million doses of the vaccine. With this, we are optimistic to inoculate 70 million Filipinos or the entire adult population by the end of 2021. This is a step closer to achieving herd immunity in the country.
The economy’s recovery will also get a boost from the 2021 budget, the Build, Build, Build program, and the implementation of the Corporate Recovery and Tax Incentives for Enterprises or CREATE law. The economic team also looks forward to the passage of the amendments to the Public Service Act, the Retail Trade Liberalization Act, and the Foreign Investment Act. All these will help attract investments, push up our growth potential, and create more and better jobs.
To help the people cope with the heightened quarantine, the government is providing emergency subsidies in ECQ areas. Moreover, the government is working to ensure stable and affordable food prices. Last May, the President signed Executive Orders 133 and 134 to address the spike in pork prices due to the African Swine Fever through a higher minimum access volume and lower tariffs. Since then, pork inflation has decreased from 58.4 percent in May to 38.4 percent in July.
Meanwhile, rice prices continued to fall with inflation of -1 percent in July. The Rice Tariffication Law has achieved its dual goal of bringing down retail rice prices while helping farmers improve productivity through the Rice Competitive Enhancement Fund or RCEF. Executive Order 135, which reduced the most-favored nation tariff rate of rice outside ASEAN, will also help ensure adequate rice supply at affordable prices.
The government will also proactively ensure that fish prices do not rise further as supply narrows in the upcoming close fishing season starting October. The Department of Agriculture is preparing to issue certificates of necessity to import (CNI) to cover the supply gap.
Prospects for Recovery
Prospects for a strong economic recovery in 2021 remain promising. Although there are speed bumps given the current ECQ in Metro Manila and other parts of the country, we are now better equipped to sustain continuous positive growth.
The Development Budget Coordination Committee (DBCC) will review the recent economic data and the risks associated with the Delta variant to fine-tune our growth targets and adjust our recovery strategies.
The Duterte administration remains steadfast in its commitment to save lives, protect communities, and preserve the livelihood of Filipinos amid this pandemic. With everyone’s cooperation, we will recover strongly and regain the pre-pandemic growth momentum towards a better life for every Filipino.
Thank you very much and safe stay, all.