The country’s economic growth toward the end of the year and 2014 is seen “to be sustained by 6 percent to 7 percent,” according to an economist.
Though the country is expected to remarkably grow by 6 percent to 7 percent in the following years, Jun Neri, lead economist at the Bank of the Philippine Islands (BPI), said that the country is “not doing what we should do” to achieve 8-percent to 9-percent gross domestic product (GDP) growth “which is the kind of growth we need to sustain growth toward the long term.”
He cited Indonesia’s case, while suffering from liquidity and foreign exchange issues, still built and invested more on infrastructure projects that will lead to economic stability. The economist noted that in the recently held World Economic Briefing, Indonesia moved 17 steps up in the world infrastructure ranking as opposed to the Philippines’ two notches.
“The reason why Indonesia is having problems with dollar liquidity is because they spend a lot of dollars to build roads, bridges, airport and other infra projects that will make Indonesia sustainable in growth at 6 [percent]to 7 percent, while the Philippines unfortunately did not,” Neri said.
“While we can sustain 6 [percent]to 7 percent, the likelihood that we will reduce poverty with 8- [percent]to 10-percent expansion for the next two years or so is not likely to happen, because we are not building the capacity to be able to grow that much,” he added.
According to the BPI lead economist, the country’s inflation will post an increase but will not reach the 3-percent to 5-percent target of the Bangko Sentral ng Pilipinas. Price management is “doing very well,” and there is much domestic liquidity in the country compared to other markets, Neri said.
“The Philippines would not be able to see a sharp deceleration in growth because financial conditions in the country are much, much better than anywhere else in the world, especially the emerging markets,” he said.
For his part, Michaelangelo Oyson, BPI Securities chief executive and managing director, said that the GDP growth will be 7 percent by yearend and can further go to 8 percent without major external shocks and global financial crisis.
A fast-growing business process outsourcing (BPO) sector and overseas Filipino workers dollar remittances will continue to drive and sustain the 6-percent to 7-percent GDP growth for 2014.
Oyson mentioned that the market is consumer-driven and services take a bulk of the economic growth. Meanwhile, Neri said that the global markets will achieve a mild economic growth, as the United States and Europe will make a very slight recovery from their past consecutive losses.
“US would seek growth in their economic performance, about 2.5 percent next year. Europe is also going to get out of contraction . . . will rebound and bounce back, and will be back to a very slight expansion in 2014. Basically it is just a bounce back for US and Europe—a very gradual increase,” Neri said, referring to Europe and US markets influencing global markets with slight optimism.
Earlier, economic analysts were not able to predict the remarkable surge of the country’s GDP growth for the year—7.8 percent in the first quarter and 7.5 percent in the second quarter—following the 6.3-percent growth for the whole 2012.