The Philippine economy is expected to grow by 7 percent for the whole of 2013 and 7.4 percent in 2014, as reconstruction efforts for areas affected by Typhoon Yolanda take place, among other factors.
Victor Abola, University of Asia and the Pacific economist, said at the First Metro Investment Corp. (FMIC) press briefing on Monday that besides the reconstruction effort in the Visayas, the country’s gross domestic product (GDP) is seen to go up because of “robust services sector” as well as the potential advancement of the public-private partnership (PPP) projects lined up.
Abola said that the main factor for 2014 GDP growth would be the reconstruction and rehabilitation in the Visayas, which can account for over 1 percent of the GDP.
“Reconstruction [of Yolanda-stricken areas]is a major factor . . . one year, over 1 percent. Without it, we would only be growing 6-percent to 6.5-percent,” the economist said, factoring the P361-billion government budget for the Reconstruction Assistance on Yolanda (RAY) plan.
For his part, FMIC President Roberto Juanchito Dispo said that he forecasts 7-percent to 7.5-percent GDP growth for this year.
Dispo said that the above 7-percent growth would be driven by increased reconstruction efforts in Yolanda-stricken areas, rebound of the United States, Europe and Japan markets, as well as the increase in business process outsourcing (BPO) activities and overseas Filipino workers’ (OFW) remittances.
“The country would benefit from global recovery and emergence from recession, massive reconstruction and rehabilitation work in the Visayas [with P361-billion reconstruction budget for the next four years], recovery of export markets, BPO and [OFW] remittances,” Dispo said, citing also the growth of export manufactures.
He added that there would be a strong demand for power financing. On the other hand, FMIC Chairman Francisco Sebastian said that the country remained strong in terms of economic fundamentals despite volatilities within the year.
“2013 is a year marked by natural calamities and uncertainties both in developed and emerging markets, but may also be remembered as a year when the Philippines achieved investment grade status. We are still the best performing economy in Asean with a 7.4-percent GDP growth in the first nine months of 2013,” Sebastian said.
Asean is the Association of Southeast Asian Nations.
FMIC’s 2014 forecasts was also based on the following factors: remittances growing by 6 percent to 7 percent as OFWs will send more money to their families affected by Yolanda; inflation to be manageable at 3.8 percent to 4 percent; and exports and imports improving by 6 percent to 10 percent, and 8 percent to 12 percent, respectively.
Dispo said that the budget deficit would be about 2.3 percent, compared to the government’s target of 2 percent, while debt to GDP is seen reach about 7.5 percent this year. Bede Lowell Gomez, FMIC assistant vice president, said that in 2014, domestic consumption would be at 5 percent of GDP, and infrastructure at 3.5 percent of GDP per government program.
Gomez said that foreign direct investments would go up by 33 percent while manufacturing output would increase by 12 percent compared to the actual growth in the first nine months of 2013. He also said that active and gaining sectors for the year will include property and infrastructure, consumer, gaming and manufacturing.
Meanwhile, the economists identified a number of negative factors that could be a threat to the country’s economic growth: failing to execute PPP projects; possible dragging of reconstruction efforts in the Visayas; high electricity rates, political risks such as the pork barrel scam; inflated property assets that can cause a bubble; and external risks and influences.
On asset bubble fears, Abola said that, “it is not likely because of remedial actions” and that the country’s domestic demand and savings remain robust.