through uncertainties; still one of Asia’s fastest-growing major economies
By Leslie D.
MANILA, Dec. 25 (PNA) -- The Philippines has cemented its position as
one of Asia’s fastest-growing major economies despite uncertainties in 2015,
and now appears en route to becoming a member of the upper middle-income
countries over the next six years.
The country’s gross domestic product (GDP) averaged 5.6 percent in the first
three quarters on strong demand and more jobs and investments.
National Economic and Development Authority (NEDA) Director General Arsenio
Balisacan said strong domestic demand can enable the economy to grow by 5.9
percent in the fourth quarter, ending the year with a growth of at least six
percent despite the devastation wrought by typhoons.
Balisacan said the impacts particularly of recent typhoons “Lando” and
“Nona” were already factored in growth projection for the agricultural
“The last two ones were damaging and there were serious losses and damage to
infrastructure, but not in a magnitude that will adequately make a dent on
growth prospects for the full year,” he said, noting that the
typhoon-affected agriculture sector represents less than 10 percent of the
The economy is boosted mainly by the continued strengthening of the industry
and manufacturing sectors.
The services sector, particularly the information technology-business
process management, also remained robust.
“This puts the Philippines as one of the fastest-growing major economies in
Asia, just after India, China and Vietnam. Our year-to-date performance
reflects a steadily growing economy, and we are very optimistic that the
Philippine economy will grow at 6.0 percent for full-year 2015,” Balisacan
Economic growth target for 2016
Balisacan said economic growth target for next year remains at 7.0 percent,
even as the Development Budget Coordination Committee (DBCC) has yet to
revisit economic targets for this and next year.
“But I do think that the target of 7.0 percent in 2016 is still quite
realistic. As you know the whole economy is improving, even though that the
United States has started its interest rate hike… I think the market has
already anticipated that so that the impacts are not likely strong
especially for countries like us that have some good macroeconomic
fundamentals,” he said.
The United States Federal Reserve has raised interest rates for the first
time in nearly a decade by 0.25 percentage points.
Balisacan cited domestic sources for sustained economic growth, foremost
among them investments and domestic consumption as well as low interest
rates and good consumer sentiment.
“We need to re-balance our sources of growth so that we get more of those
investments and we get more of trade and in the process we improve the
quality of jobs that are made available for our workers… That would allow us
to escape poverty for most number of our people,” he said.
Higher middle-income economy
Balisacan is optimistic that economic growth can further accelerate on the
back of the recovery of advanced economies expected next year and of the
global economy in the medium-term, bringing the country to higher
middle-income economy status by the end of the next administration.
Citing a World Bank definition, he said the Philippines needs to achieve per
capita income of USD 4,125 to USD 12,735 to become a high middle-income
country. The country is currently classified in the lower middle-income
group where per capita income ranges from USD 1,046 to USD 4,125.
“Given the backlogs that we have in infrastructure, in human capital and
investment in innovations, you can take advantage of those backlogs by
addressing them quickly so that we can raise the level of the potential
growth of the economy,” added Balisacan.
To achieve this status, the NEDA chief underscored the need for the country
to pursue policies and programs that will improve industries’
competitiveness and productivity and raise investments in human capital
“However, while the Philippine economy has been growing at a rapid pace in
the last five years, much still has to be done to achieve even faster
poverty reduction and more inclusive growth,” he said.
The government has been increasing its infrastructure investment from 1.8
percent of the country’s gross domestic product (GDP) in 2011 to 5.0 percent
of GDP in 2016.
It is ramping efforts to address the issue of underspending on public
infrastructure ahead of next year’s elections.
The capacities of the local governments in project planning and budgeting
has been also strengthened.
Balisacan said it is imperative for the country to continue developing
infrastructure, encourage technological innovation and pursue regulatory and
structural reforms to unleash its potentials and maximize gains from
“Through these, the country can further attract investment flows, as
investors in advanced economies affected by the global financial crisis
search for markets with higher returns and better prospects,” he said.
There are currently 12 awarded projects worth PhP217.42 billion in the
Philippine public-private partnership (PPP) pipeline, two other projects
under implementation, 13 other projects in different stages of procurement
and three others for roll-out.
Human capital development
Expenditures on social services, particularly education, health, social
security and housing, have shown significant improvement, indicating the
country’s serious thrust of heavily investing in human capital development.
“For the years ahead, it is critical for our country to be able to take
advantage of its relatively young population joining the labor force in the
next decade,” Balisacan said.
The latest Labor Force Survey showed a new 10-year record low unemployment
rate at 5.7 percent, mainly on the boost in the services and industry
This is the first time that the unemployment rate dropped below 6.0 percent,
even better than the target set in the Philippine Development Plan of 6.6 to
“Despite the improved figures, we still need to further improve the quality
of jobs available in the market and upgrade the skills of our labor force.
This is the bigger challenge. Sustained increases in labor incomes can only
come about by raising productivity,” the NEDA chief further said. (PNA)