Inclusive growth needs robust manufacturing sector, says ADB

The Philippines’ robust services sector must be coupled with a vibrant manufacturing sector to achieve inclusive growth in the country, an economist at the Asian Development Bank (ADB) said.

Donghyun Park, ADB principal economist, said the country’s services sector was not enough to create the needed employment and attain significant reduction in poverty levels.

According to the latest Labor Force Survey of the National Statistics Office, 2.8 million Filipinos were without jobs in July, translating to an unemployment rate of 7 percent, which is almost similar to the 7.1 percent reported in the same month last year.

Data from the National Statistical Coordination Board showed that poverty incidence among families went down from 21.1 percent in 2006 to 20.9 percent in 2009 — meaning, only two families per 1,000 were lifted out of poverty between 2006 and 2009.

“The Philippines and also India, by the way, need well-balanced growth and development, with dynamic services and manufacturing sectors reinforcing each other. There are a lot of synergies between manufacturing and services,” Park said during an online chat.

He cited the contribution of the services sector to economic growth, but said that the booming information communications technology and business process outsourcing services sector had limited linkages with the rest of the economy.

“To a large extent, the limited linkages reflect the underdevelopment of other sectors especially manufacturing,” he said.

The economy expanded by 5.9 percent in the second quarter, with the services sector contributing 4.3 percentage points, followed by industry with 1.5 points and agriculture, hunting, forestry and fishery with 0.1 points.

Philippine Institute for Development Studies president Josef Yap earlier said that reviving the labor-intensive manufacturing sector could help attain inclusive growth that would create more jobs and reduce poverty significantly.

The government is currently crafting an integrated manufacturing road map that will determine bottlenecks and provide recommendations to revitalize local industries.