Oxford Business Group (OBG) said on Monday that the country’s gross domestic product (GDP) growth would dwell between 6.5 percent and 7 percent because of the emerging sectors that would drive the economy.
Rodrigo Diaz, editorial manager of OBG, told reporters after the group’s presentation of its economic report on the Philippines that the country’s GDP would grow between 6.5 percent and 7 percent this year, attributable to the development of the services sector, manufacturing and infrastructure, increased domestic demand, and reconstruction and rehabilitation efforts in areas hit by Super Typhoon Yolanda (Haiyan).
“Considering the robustness of the services sector which has been the strongest sector for the past decade and . . . the much optimism on manufacturing sector and construction which has generated much growth for the first quarter of 2013—industry sector outpacing the services sector for the first time in the decade,” he said.
“There seems to be a lot of optimism in terms of diversification of the [Philippine] economy,” Diaz added.
He further said that there is so much potential in the industrial sector, with manufacturing “outpacing” the services sector.
Diaz said that the main drivers for the services sector would be business processing outsourcing (BPO), tourism and health-related sectors.
“The thing about BPO is that although it has been growing tremendously still, it only targets so far by 2016 around 1.3 million [employed]but it’s more targeting the skills population whereas there is still very high incidence of unemployment in the country, which like manufacturing, the technical skills and education [is needed]to be addressed,” the OBG official said.
“Having a new paradigm on tourism with inclusiveness not as the goal, but as a part of the strategy towards tourism locations, specifically ecotourism in areas outside Metro Manila—that decentralizes economic activity from the metropolis which will be already 33 percent of the GDP of the Philippines,” Diaz added, citing that tourism sector plans will contribute much to the economy toward the end of the Aquino administration.
For infrastructure development, he said that public-private partnership (PPP) projects would be a factor—with the PPP Center eyeing 50 projects rolled out by 2016.
PPP projects are among the three main challenges Diaz cited for the further growth of the Philippine economy. The other two are the streamlining of the credit processes to national level, and settling the 60-40 rule on foreign business ownership in the country that would affect foreign direct investments flows.
The Constitution currently limits foreign ownership in companies established in the Philippines to only 40 percent.
Optimistic on administration
On the other hand, the Oxford economic report on the Philippines said that the country will experience “optimism and great stability” as the current administration maintains trust and public support.
“Elected on the promises of change, the President [Benigno Aquino 3rd] has set the bar high—with the next half of his presidency likely to see more moves to address the long-term challenges of his diverse and dynamic country,” the report said.
The government earlier said that it targets 6.5-percent to 7.5-percent GDP growth for 2014. The GDP growth for the whole of 2013 is slated to be released on January 30.
On the other hand, Margarita Songco, National Economic and Development Authority deputy director general, said in a statement that the country is “sustaining, if not surpassing” its growth performance in 2013, by making economic growth led by investment and employment than consumption.
According to the Philippine Development Plan 2011-2016, manufacturing is expected to drive the economy, since that sector can provide jobs to reduce poverty in the country.
“For the first quarters of 2013, the manufacturing subsector contributed 2.1 percentage points to the 7.4-percent GDP growth. Based on the latest Labor Force Survey in October 2013, it employed 3.1 million workers or about 8 percent of the country’s total employment,” Songco said.
“Manufacturing subsector’s contributions to the economy were supported by the latest Monthly Integrated Survey of Selected Industries that shows the volume of production index (VaPi) and value of production index (VoPi) increased by 21.3 percent and 16.2 percent in November 2013, respectively. VoPi growth rate for November is the highest since September 2010, while VaPI growth rate is highest since November 2012,” she added.