The Philippines may sustain its current pace of growth in gross domestic product (GDP) at more than 6 percent for several decades, and could even step it up to 8 percent this year if oil prices stay below $60 a barrel, the head of the Department of Trade and Industry (DTI) said.
“GDP growth for this year is projected at above 7 percent. But if oil prices remain below $60 a barrel, we have a fair shot at exceeding 8 percent throughout the period,” Trade Secretary Gregory Domingo said in a speech at the Philippine Retailers Association (PRA) Awards Night on Wednesday.
Oil prices have declined more than 50 percent since June last year, slumping to as low as $50 per barrel. Crude prices have ticked upward again recently, but still remain below the $60 per barrel threshold.
The trade chief said the country’s 6 percent to 7 percent GDP growth pattern is expected to be sustained not only for five to 10 years, but could stretch to a “multi-decade” trend.
“[Our] GDP growth pattern appears to be multi-decade; it’s a multi-decade pattern assuming we do certain things right,” he added.
In order to achieve this, Domingo said the country should focus on “massive investments in education and infrastructure… because as we move to the level of higher per capita GDP countries, we have to move up the value chain, and we can only do that if people are educated better and better and better.”
The DTI secretary said the country is nearing the $3,000 GDP per capita level, and needs education and more infrastructure to grow businesses that can catch the fast growing purchasing power of Filipinos.
Economic growth is forecast to be sustained at above 6 percent if the government aims at level playing fields for investors, continued reform and calibrated liberalization.
“Liberalization is done in a calibrated fashion to what we can swallow . . . If you notice our fastest growing sectors are the ones we [government]deregulated. If we liberalize, there is long-term growth and competitiveness for our industries,” he said.
The sectors that need to be “liberalized” are infrastructure, transportation, logistics, and other segments in services, Domingo explained.
The Development Budget Coordinating Committee (DBCC) is targeting 7 percent to 8 percent GDP growth for 2015 and 2016 following the good economic performance last year at a 6.1 percent expansion. For the last five years, the Philippine economy has been growing at an average of 6.3 percent.