Robust PH growth seen by UN unit

The United Nations Economic and Social Commission for Asia and the Pacific (Unescap) sees the Philippine economy growing by 6.5 percent this year and 6.4 percent next year, mainly on expectations that the government would spend more on public goods and services ahead of the 2016 elections.

But an economist at the UN agency reiterated that the robust economic growth being enjoyed by the country would trickle down to the poor only if reforms are to be sustained.

In its “Economic and Social Survey of Asia and the Pacific 2015” report released on Thursday, the Bangkok, Thailand-based Unescap attributed its “robust” gross domestic product (GDP) growth forecasts for the Philippines for the years 2015 and 2016 to an expected “rebound in government spending and lower inflation.”

Unescap’s projections were nonetheless lower than the 7-8 percent GDP growth targets set by the government for both 2015 and 2016.

“The government is expected to accelerate spending ahead of the six-month moratorium on project approvals prior to the national election in May 2016,” Unescap noted. Last year’s GDP growth slowed to 6.1 percent mainly due to anemic government spending on the back of judicial challenges.

According to the UN agency, services will continue to be a growth driver of the Philippine economy. “In particular, the business process outsourcing sector is expected to generate some $25 billion in revenues by 2016, accounting for a tenth of the economy,” Unescap said, adding that the Philippines has already overtaken India as the “call center of the world.”

While the sustained inflows of remittances from Filipinos overseas, an inflation-targeted monetary policy and improved fiscal management would support further economic expansion, Unescap advised the Philippines to also strengthen manufacturing while fast-tracking infrastructure development.

“It is important to expand the traditionally weak manufacturing base through regulatory reforms as well as increased public investment,” the UN agency said.

As for infrastructure, Unescap cited that government spending on infrastructure in the Philippines “has been chronically low.”

The lack of infrastructure should be addressed in order to attract more investors and also reduce the cost of trade, Unescap economic affairs officer Steve L. Gui-Diby said in a briefing.

As far as the entire Asia-Pacific region is concerned, economic reform pushes inclusive growth, Gui-Diby noted.

However, “if reforms are not pursued, risks remain and these hold back the expansion of economies,” Gui-Diby pointed out.

In the case of the Philippines, Gui-Diby said “it is important to have a stable regulatory framework to strengthen PPPs [public-private partnership projects],” noting that the private investors in such projects need to be assured that they can pour their money into the country for the long-term “without being afraid.”