Rise in infra spending seen to accelerate growth
The Asian Development Bank expects a spike in infrastructure investments in the Philippines over the next two years, saying this will help the economy bounce back to its potential growth rate after a slowdown last year.
Neeraj Jain, country director of the ADB for the Philippines, on Wednesday expressed confidence that projects lined up under the Public-Private Partnership (PPP) program of the government would already be implemented starting this year.
Under the PPP program, private enterprises are invited to invest in key public infrastructure projects such as roads and airports.
“The government has reached the point where it can already implement sustainable projects,” Jain said in a press conference on Wednesday on the ADB’s latest economic outlook on Asian countries.
The ADB believes the government can deliver on its commitment to fast-track the implementation of the projects now that it has completed the review of project proposals and that a system that can help prevent corruption-related leakage of funds is already in place.
ADB said in its latest report that it was keeping its economic growth forecast of 4.8 percent for the Philippines for this year, citing the likelihood that various infrastructure projects would be implemented.
The projection is in line with the 4- to 5-percent growth range—which economists said is actually the country’s potential growth—that the Philippines had been hitting yearly for a decade until 2011.
Last year, the Philippines grew by only 3.7 percent, which many said was below its potential, partly due to under-spending by the government and delays in the implementation of infrastructure projects.
The country’s economic managers claimed that PPP projects suffered from delays because of the review of the project proposals and the systems for their implementation.
Besides an increase in infrastructure investments, growth in remittances-backed household consumption, and positive sentiment of investors are also seen driving economic growth this year.
In the meantime, ADB senior economist Norio Usui said in the same press conference that the Philippines should hurdle bottlenecks in its economic structure to be able to accelerate economic growth to the desired level of 7 to 8 percent.
Usui said the Philippines should attract more investments in the industry sector, especially in manufacturing, to be able to grow faster.
The ADB economist said while investments in the services sector had helped the country post decent growth rates of between 4 and 5 percent, investments in the industry sector would help speed up growth to 7 to 8 percent.
This is because the industry sector, compared with the services sector, is more capital intensive and provides more jobs.
