Economic challenges are expected to remain, yet the Philippines is up for “several quarters” of growth this year as the United States and Europe show signs of recovery, economists and government officials said. The US and Europe are big export and labor markets, as well as major sources of investments for the Philippines.
Improved retail sales and manufacturing index in the US and talks about the creation of a regional ministry of treasury for Europe are signs that the two major economic powers may be on the recovery path, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said in a briefing.
As such, the Philippines will likely benefit benefit and may enjoy “several quarters of growth” especially with more intensive infrastructure spending and continued strength in the services sector.
Recent US data showed that recovery in the world’s top economy seemed to be gaining traction, with its economic trajectory pointing upwards, according to the National Economic and Development Authority (NEDA). “Its fourth-quarter GDP [gross domestic product] growth might exceed 5 percent,” it said.
Private economists, however, said the “several quarters” of growth, measured in terms of GDP, would likely be at a clip of only 4 to 5 percent instead of the “high growth” of 6 percent or higher, which the government wanted.
Under the present scenario of unchanged monetary policy and low public spending, a GDP growth of 4 to 4.5 percent might be sustained, Benjamin E. Diokno of the UP School of Economics said in a text message.
However, he said, with high and rising inequality and rapid population growth, such pattern of growth is “unacceptable.”
Inflation rate, or the rate of increase in the prices of goods and services, for the first 11 months of 2011 averaged 4.5 percent, which is within the BSP target of 3 to 5 percent for 2011.
“With the prospect of overseas employment dimming, this growth performance might lead to heightened social conflict,” Diokno said.
Cid L. Terosa of the University of Asia and the Pacific expects 3 to 4 quarters of growth at an average of 4 to 5.5 percent before
market correction takes place.
“The impact of efforts to buoy the world economy would be crucial. Increase in public spending will be seen this year as it is crucial in maintaining and eventually improving growth,” Terosa said.
Economists warned that without strong consumer spending and private investment, growth would remain at low levels, which would not help the government curb poverty and spread income opportunities to more Filipinos under its “inclusive” growth strategy.
Major labor markets such as the US, Europe and the Middle East are facing more pressure from their citizens to “nationalize” employment opportunities. That means less overseas employment opportunities except for more highly trained, well-experienced Filipinos.