The Philippines will remain among the fastest-growing economies in the region, but risks from global uncertainties abound such that the government must introduce labor and investment reforms to better face these challenges, a visiting economist of the World Bank said Monday.
In a press briefing, World Bank Group acting chief economist for the East Asia and Pacific region Andrew D. Mason noted that “the Philippines over the last decade has had outstanding growth performance—it’s above average for developing East Asia.”
The World Bank had projected the gross domestic product (GDP) to grow 6.5 percent this year and by a slightly faster 6.6 percent in 2020 and 2021.
The Washington-based multilateral lender’s forecasts for the next three years were nonetheless below the government’s 7-8 percent target range yearly until 2022.
The GDP grew 6.2 percent in 2018, the slowest in three years, as high prices of basic commodities coupled with slower agriculture expansion tempered growth.
However, Mason pointed out that “we’re in uncertain global economic environment at the moment” given the looming US-China trade war, as well as uncertainty on whether the US Federal Reserve will again raise interest rates.
To make the Philippines better insulated from external shocks, Mason recommended increasingly tapping services trade, while also bracing for the so-called fourth industrial revolution where automation and artificial intelligence were seen replacing workers, for instance, in the business process outsourcing sector, a major dollar earner for the country.
“It’s a legitimate concern in the Philippines, also elsewhere in the region. Technology will move ahead; private firms will adopt it. The government needs to think about strengthening human capital of citizens without basic education and digital literacy—people at risk of falling behind,” Mason said.
Noting that the Philippines has underperformed in terms of education in the early 2000s, Mason said it was “an area of high priority as technology changes” that the government must address.
“The future of the Philippines’ growth is in high-value services,” Mason said, referring to BPO, media and communication, finance, as well as tourism, among other service sectors.
Also, Mason said prevailing restrictions capping foreign investor participation in the country “can be counterproductive.”
“Not only regulations but also administration of regulations” by the bureaucracy hamper flows of more FDI, he said. —BEN O. DE VERA