Good government policies will counter the negative impact of natural calamities and likely sustain the Philippine long-term economic growth amid tighter United States monetary policy, according to Moody’s Analytics.
In a commentary “Asean Outlook: Politics Shape 2014,” Moody’s Analytics associate economist Fred Gibson said that the damage from Super Typhoon Yolanda will likely weigh on the Philippine economic growth in the first half of 2014.
However, Gibson noted that the recovery effort later in the year and positive momentum from government reforms should support gains over the next 18 months.
He said that the Philippines is one of the strongest performers in the Association of Southeast Asian Nations’ (Asean) over the last two years, and the government can claim credit for the country’s economic gains.
The Moody’s Analytics economist mentioned that the government has set out a feasible blueprint to improving infrastructure, reducing corruption and encouraging greater foreign direct investment into the country.
To date, the national government spending on infrastructure maintained double-digit growth levels year-on-year, with a 20.5-percent or P37.9-billion increase as of end-November 2013. The government is also targeting a 5-percent infrastructure spending by 2016.
Meanwhile, the country’s latest foreign direct investments (FDI) data showed that investors remain positive to the Philippine economy as the investments which flowed into the country from January to October 2013 reached P3.4 billion.
Regionwise, Gibson said that the outlook across Asean remains mixed, noting that the improving global economy will lift exporter incomes; however, the varying political landscape and asymmetric capital outflows from tighter United States monetary policy will dictate the outlook in 2014.
“The improving global economy bodes favorably. The firming US recovery, a stabilizing eurozone, improvement in Japan, and the steady Chinese economy are set to lift global growth to 3.1 percent, from 2.1 percent in 2013,” he said.
He added that looking into this year, investors will continue to punish those with unfavorable external positions and incompetent policies.
“It is no coincidence that economies with large external imbalances are generally mismanaged, with a long track record of corruption, heavy-handed regulation and ongoing political infighting,” he said.
However, the economist said that policy remains steady across the rest of Asean region, noting that government policies in Singapore, Malaysia and the Philippines are geared toward sustaining long-term growth.
“Singapore is a developed country with quality institutions ranked highly in international surveys. The Philippines and Malaysia are not in the same league, but have made progressive strides on the fiscal front over the last couple of years,” he said.