Philippine economic growth will remain robust but further expansion is being held back by the lack of needed infrastructure, a former Cabinet official said.
“Overall the economy is still on solid ground” despite “noises out there,” former Socioeconomic Planning
Secretary Arsenio Balisacan said in a roundtable with The Manila Times on Wednesday.
“The economy has the potential to grow at 7 percent in the long haul but there are obviously challenges,” he told the paper’s editors and reporters.
Balisacan, who is now chairman of Philippine Competition Commission (PCC), was asked for his views on the country’s growth prospects as he had headed the National Economic and Development Authority (NEDA) during the previous administration.
Gross domestic product growth was 6.9 percent last year, near the top end of the 6 percent to 7 percent target. The goal for 2017 is 6.5 percent and 7.5 percent, out of reach for the moment given first half growth of 6.4 percent.
The government, however, remains optimistic of a second half spurt and is targeting even higher 7 percent to 8 percent growth for 2018.
The economy, Balisacan said, is now less vulnerable to external shocks given robust remittances from overseas Filipinos, outsourcing revenues, more diversified exports and continued foreign investments.
“A sneeze of any particular country doesn’t really budge the economy today as it did 10 years ago,” he pointed out.
Balisacan discounted the weakening of the peso — back at the P50:$1 level after falling into P51 per dollar territory — and said this would help local producers compete globally.
The decline, however, has to stable and gradual, a point that monetary officials have continued to stress.
“If there is a single factor that limits our potential, it is infrastructure,” Baliscan said, describing the current state as “very pathetic”.
“The backlog is so severe and the sooner we move to spending for infrastructure, we should. There is so much catching up to do,” he stressed.
Another constraint, meanwhile, is the country’s regulatory regime.
“There are so many regulations, policies, issuances in this country that slows down the opening up of new businesses,” Balisacan said.
Closing a business is even more of a pain, he noted.
The PCC chief said the Duterte government was looking in the right direction with its ambitious infrastructure program, noting that many of its flagship projects aimed at filling in critical gaps.
“The question is can you implement? There are sweet spots in the infrastructure program. If the economy is growing rapidly and other sources of revenues are there, then the market can take that positively,” he said.
The Duterte government aims to spend between P8 trillion and P9 trillion over its six-year term on roads, railways, airports, seaports, and other big-ticket infrastructure projects under the “Build Build Build” program.