Trade chief sees PH growing by over 7% in ’15

Trade Secretary Gregory L. Domingo is bullish that the Philippine economy can post growth of more than 7 percent in 2015, to be driven largely by increased infrastructure and election spending as well as lower inflation rates and oil prices.

This was despite expectations that the country’s gross domestic product (GDP) will settle at only about 5.5-6 percent this year due to the effects of the devastation brought about by Supertyphoon Yolanda in November last year; the port congestion problem and the controversies surrounding the Disbursement Acceleration Program (DAP), which curbed government spending in the third quarter.

“The (slowdown in economic growth) is just a blip. The economy grew too fast from 2010 to 2013, and usually, the trend is that it will slow down for a year before it goes back to high gear. Next year, we can expect to see these high growth rates again,” Domingo said.

According to the trade chief, 2015 will see higher infrastructure spending, equivalent to about 3.5 percent of the GDP from the current 2.5 percent. Projects under the public-private partnership program are expected to accelerate and election spending will come in largely in the second half of 2015.

Domingo further noted that the government was also expecting to fully resolve the port congestion problem by early 2015, eliminating one of the factors that dragged down economic growth in the third quarter of 2014.

Another factor, according to Domingo, will be the expectation of a lower inflation rate due to continued drop in oil prices in the global market. The softening of oil prices has been steady over the past two months and this is expected to be sustained in the next several years, he said.

“I think the decline (in oil prices) will be sustained for a few years because of the availability of shale gas in the United States and the recent discovery of several new fields in Canada, Australia and Malaysia,” Domingo said.

“There is now more supply in an environment wherein the economies in Europe are still on a slowdown,” he said, adding that the same is true with certain Asian economies because of a projected slower growth rate in China.

The lowering of oil prices is beneficial for the Philippines which is a net importer of oil. This development, according to Domingo, will help lower the country’s inflation rate and make some local industries more competitive compared to their counterparts in the region.

Other factors that are likely to boost GDP growth next year are the “very strong (investor) interest” in the Philippines, growth in remittances, and the continuing strong performances of the services and manufacturing sectors, he said.

It was reported last week that the Philippine economy expanded by only 5.3 percent in the third quarter, making it more difficult for the country to reach its GDP target of 6.5-7.5 percent for 2014.