Economic planners remain confident that the country to achieve 6 percent growth this year, with prospects for succeeding years likely to be much better if reforms continue to be pursued by the next administration.
“Taking into consideration the 6-percent GDP (gross domestic product) growth during the third quarter of 2015, we expect our high growth trajectory to continue in the fourth quarter of the year as domestic demand continues to be strong,” Socioeconomic Planning Secretary Arsenio Balisacan said in a yearend briefing on Thursday.
He said favourable indicators supported the projection and that the National Economic and Development Authority (NEDA) had also factored in the impact of typhoons on the agriculture sector.
“In our data, we know that we have some typhoons coming in November and December.
The last two ones were damaging and there were serious losses and damage to infrastructure, but not in a magnitude that will adequately make a dent on growth prospects for the full year,” Balisacan said.
The agency’s 2015 projection, previously announced by Balisacan and other government officials, falls below the official 7 percent to 8 percent target. It is also lower than the 6.1 percent GDP growth recorded 2014.
Balisacan, who is the NEDA director general, said there was room for accelerated growth next year.
“The growth target for next year remains at 7 percent to 8 percent but the target of 7 percent is quite realistic,” he said.
He said that with an expected recovery for advanced economies next year and in the medium-term for the global economy, the Philippines could achieve upper middle income status by the end of the next administration.
Citing a World Bank definition, he said this would meaning achieving per capita income of $4,125 to $12,735. The Philippines is currently classified in the lower middle income group where per capita incomes range from $1,046 to $4,125.
“In the next six years, if we continue the pace that we have now, we should be a member of the upper middle income country before the end of the next administration,” he said.
Balisacan said the economy’s potential growth currently stood at 6 percent but could be jacked up and 7 percent to 8 percent if the process of building human capital, addressing infrastructure bottlenecks and improving the institutional environment for doing business is improved.
To achieve this, the NEDA chief said there was a need to rebalance the economy to secure investments, not just in terms of portfolio capital but for job-generating ventures.
“We are dependent on consumption as a source of growth,” he noted.
Balisacan cited the need to continue policies and programs that would improve competitiveness and productivity.
“For the years ahead, it is critical for our country to be able to take advantage of its relatively young population [who will be]joining the labor force in the next decade,” he said.
The Philippines can also continue to tap advanced economies, particularly through preferential trading relations, to increase the volume and value of external trade.
Balisacan said reforms in the bureaucracy and the elimination of unnecessary and irrelevant laws and regulations were equally important.
The NEDA chief also cited the need to strengthen and improve the nation’s institutions as these play a critical role in the development process. In particular, a peaceful and credible transfer of power in 2016 will ensure continuity of growth, he said.
“We have made significant long-term investments and initiated important reforms whose results may not be immediately felt. We hope that the next administration will continue and further deepen these reforms, careful not to lose sight of the long-term, even while immediate needs are addressed,” Balisacan said.