The Philippine economy could expand by up to 8 percent this year if the government effectively declogs its underspending bottlenecks and invest more in infrastructure development, according to an analyst.
Emilio Neri Jr., lead economist at Bank of the Philippine (BPI) Islands, is not just confident the country’s gross domestic product (GDP) could grow faster than the global economy, which the International Monetary Fund has projected to expand by only 3.8 percent this year.
“Growth has been sluggish since the global financial crisis, but the Philippines managed to register a growth streak (from 2011 to 2014) not seen since the 1950s. So, the Philippines, to large extent, is pretty much running on its own engine of growth,” he said.
Neri noted that with a robust domestic liquidity and demographics, GDP could grow by at least 6 percent.
“We are forecasting 6.5-percent growth, however, as election spending can be an additional boost in in the second half of 2015,” he added.
The economist also believes that the lower end of the government’s 7 percent to 8 percent target can be achieved if petroleum prices will stay on the low side of the equation.
“Seven percent can be achieved if oil prices remain near $50… So, the government target is not too far fetched,” he said.
However, Neri said 7 percent GDP is very achievable if the government can declog the underspending bottlenecks and spend more in infrastructure.
“If we can put in more infrastructure and get the PPPs really running, 8 percent is within reach too,” he said, citing the sluggish pace of the public-private partnership program.
Earlier, the Department of Budget and Management (DBM) said it is working to ease the bottlenecks in its reform initiatives covering budget allocations to correct government underspending and help hit the economic growth targets.
The department said the lack of coordination and planning is hampering the reform initiatives, which had led to underspending that slowed down growth.
Easing these bottlenecks will correct underspending and help achieve the 2015 GDP growth target of 7 percent to 8 percent, the DBM said.
Meanwhile, the National Economic and Development Authority (NEDA) earlier said there are good prospects for infrastructure development this year.
A total of 93 projects, amounting to P1.08 trillion or $24.31 billion, have been approved by the NEDA Board. Seven of the projects have been completed, 58 are ongoing or under implementation, and 28 are still to be implemented.
By source of financing, 23 projects are funded under the PPP initiative, 53 are through official development assistance, and 17 are to be finance using domestic funds.
The government has already awarded the contracts covering nine PPP projects approved by the NEDA board, while 14 other projects are expected to be approved.