HSBC sees the Philippine economy growing at a faster pace next year on expectations that the government’s priority infrastructure projects, which have been delayed, would finally push through and cause a sudden spike in investments.
The bank estimated that the domestic economy would grow 4.8 percent next year from a projected 4.3-percent expansion in 2011.
Frederic Neumann, managing director and co-head of the bank’s economic research unit for Asia, said in a press briefing Tuesday that implementation of infrastructure projects and private investments that could come in would provide a significant boost to the economy.
The government’s priority infrastructure projects—which include airports and major roads under the Public-Private Partnership (PPP) program—were announced last year, but a single project has yet to be bid out.
Under the PPP, the government is inviting private companies to invest in public infrastructure projects. The objective of the program is to meet the country’s infrastructure needs despite the limited resources of the government.
The administration, which is being criticized for delays in implementing the projects, claimed it was only making sure proper procedures were being observed and safety nets against corruption adopted before the projects were to be implemented.
HSBC said it was optimistic that several of the projects would start almost simultaneously next year, thereby causing a sudden increase in overall investments.
Neumann said the strategy of President Aquino of pursuing good governance and transparency in public service, while it might be causing delays in implementation of some projects, has its benefits.
“If the President succeeds in fully implementing his approach of good governance, this can generate much more confidence from the private sector and increase investments,” HSBC’s visiting economist said.
A 4.8-percent growth next year, although faster than the projected 4.3 percent this year, is lower than the government’s bullish target. The government wants the economy to grow by at least 7 percent a year over the short to medium term.