A recent economic briefing shows the Philippine economic outlook looks strong (5-6% GDP growth). Let’s hope we won’t be distracted by politics or some other issues from achieving this goal.
From BusinessWorld Philippines
September 17, 2012
ECONOMIC managers and business leaders see a strong finish to 2012 across all sectors despite the persistent global slump, with their attention now turning to the creation of a sustainable growth path for following years.
“More than healthy fundamentals, we also have buoyant business expectations and improved competitiveness… We have done well in this challenging global environment,” Socioeconomic Planning Secretary Arsenio M. Balisacan said during yesterday’s midyear Philippine Economic Briefing.
After gross domestic product (GDP) grew by 6.1% in the first half — beaten only by China and Indonesia in the region — Mr. Balisacan forecast a repeat this semester.
“Our expectation is to meet the government target of 5-6%, most probably in the upper part of the range,” he said.
One of the growth drivers will be the construction sector, he said, with businesses unveiling expansion plans and the government implementing infrastructure projects.
Private consumption should also remain strong, aided by stable inflation, healthy remittances and improved job creation, and public spending will likewise support the economy as the government has only spent roughly half of its full-year program as of July.
The private sector, represented yesterday by the business process outsourcing (BPO) and banking industries, shared the optimism.
The BPO industry, for one, expects to grow faster than their goal of 15% this year, said Benedict C. Hernandez, president and CEO of the Business Processing Association.
“More than keeping the growth, though, we see the diversifying of growth. BPO is spreading to different provinces and different services,” Mr. Hernandez said.
“Non-contact centers, for example, are now growing faster than contact centers, with services like procurement logistics, creative process outsourcing and health care data management.”
Bank of the Philippine Islands President Aurelio R. Montinola III, meanwhile, said the banking industry was “very healthy” and willing to lend.
“We can get investment grade by end-2013 or mid-2014,” he also said.
The Philippines currently has a BB+ credit rating with both Fitch Ratings and Standard and Poor’s, one notch below investment grade. It also has a Ba2 credit rating with Moody’s Investors Service, two notches below. The Moody’s outlook was raised to positive in May, indicating that an upgrade is likely in the next 12 to 18 months.
The Aquino administration hopes to bag the country’s first investment grade credit rating by 2016 in order to lower borrowing costs for the government and corporations.
Economic managers, however, yesterday also warned of lingering growth risks.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. identified three key factors to watch out for: the debt crisis and deleveraging in Europe, a looming “fiscal cliff” in the United States and the slowdown in major Asian economies like China and India.
“Nevertheless,” said Finance Secretary Cesar V. Purisima, “we have fiscal space to control our fiscal destiny and pump-prime the economy if necessary.”
The budget deficit stood at P73.731 billion as of July, only a quarter of the P279.1-billion cap for the full year.
Moving forward, Mr. Montinola recommended possible engines for growth. In the short term, he said, BPO, tourism and general infrastructure will be the pillars of the economy.
Mr. Hernandez called for the development of human capital and the retention of competitive incentives to ensure that the country can keep its BPO edge.
Tourism Secretary Ramon R. Jimenez, Jr. also outlined a blueprint for his sector: infrastructure support, capability training, as well as the development of beaches in Palawan, Bohol and Cebu and cultural spots in Manila, Cavite, North and South Luzon and Mindanao.
As for infrastructure, Mr. Purisima assured that the delayed public-private partnership (PPP) program was now on track, with eight projects to be rolled out this year and a steady pipeline to follow in 2013.