The Philippines is expected to buck an anticipated Great Asian slowdown caused by an aging population.
Former economic planning secretary and Inquirer columnist Cielito Habito said the local economy would continue growing because of the country’s young population brought about by the high fertility rates in the past years.
“We have what (former Finance Secretary Cesar) Purisima et al. calls as ‘demographic sweet spot’ wherein our demographic profile is mostly composed of working age population,” said Habito, who also heads the USAID Trade-Related Assistance for Development (TRADE) Projects.
However, Habito warned that this “demographic sweet spot” might turn into a time bomb if the Duterte administration would not invest in human development, including health and education, and undertake structural reforms to create more jobs.
The former director general of National Economic and Development Authority (Neda) during the Ramos regime also expects the Philippine economy—as measured by the gross domestic product (GDP)—to grow by 6.8-7.8 percent this year while inflation rate is seen to be within 1.5-2 percent. He also forecasts unemployment to be at 5.8-6.2 percent.
Economic drivers for 2016 will include major public-private partnership (PPP) infrastructure projects, reconstruction in disaster areas, new manufacturing projects, including new foreign direct investments and shifting operations from China, investments capitalizing on the regional integration Asean Economic Community, sustained remittance growth, zooming tourism, subdued fuel prices and election-related spending.
On the other side, he said growth might be dampened by such factors as the El Niño dry spell, global uncertainties and threats, slower export demand, inferior infrastructure, lingering Mindanao conflict and tourism and gaming slowdown due to the China effect.
While Habito noted that the country has made progress in growing the economy, this did not translate to reduced poverty. To achieve inclusive growth, Habito recommended that the government focus on the concerted promotion of and support for micro, small and medium enterprises (MSMEs), inclusive value chains, wider competition and investments in human development and social protection.
For the country to achieve sustained growth, he said the government must also focus on ramping up infrastructure investments, easing investment policies and reducing regulatory burden.
Meantime, overseas-based economists expected the economy to have grown slower in the second quarter of 2016 than in the previous quarter while local forecasts pointed to higher figures.
All forecasts agree that GDP outperformed the 5.6-percent growth recorded in the second quarter of 2015.
DBS Group said it raised its forecast to 6.1 percent from 5.8 percent previously, citing election effects and continued frontloading of investments.
Moody’s Analytics is more sanguine with 6.8 percent, but this meant slower growth compared to 6.9 percent in the first quarter of this year.
“While export numbers have been rather poor, other indicators have suggested that the strong investment growth has continued from (the first quarter of 2016), probably due to the election effects,” said DBS economist Gundy Cahyadi.
“The frontloading of investments is likely to have continued in (the second quarter of this year),” Cahyadi said. “On a year-on-year basis, imports of capital goods doubled in May.”