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By Darwin G. Amojelar Reporter
PHLIPPINE investment growth
lagged behind overall economic expansion due to weak private sector
outlay and government’s serious fiscal pressure, according to a
World Bank report.
In the report titled, “Rising
Growth, Declining Investment: The Puzzle of the Philippines,” the
Washington-based lender blamed this puzzle on the government’s
inability to generate ample funds, the capital-intensive private
sector’s refusal to expand fast, and the lack of any need for
investments on the part of other private firms.
“The Filipino economy is open
to trade and capital inflows, and since 2002, growth has averaged
5.3 percent , led by the service sector. Over the last 15 years,
however, domestic investment has been stagnant in real terms and
consistently declining as a share of GDP [gross domestic
product],” the World Bank said.
The lender said domestic
investment fell by 80 percent, while foreign investment decreased by
15 percent, adding that 40 percent of the overall decline was due to
lower construction.
The bank said private investment
fell despite rising growth because the private sector found serious
impediments to investing in the poor transportation network, the
declining quality of education and the high cost of inputs,
particularly electricity.
“Between 2000 and 2004, private
investment - deterred by political instability and systemic
uncertainties - did not respond to higher growth, and private sector
credit fell by 40 percent as a share of GDP,” the World Bank said.
In 2006, investment continued its
decline as a share of GDP to below 15 percent.
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