AMID the uncertainties seen lingering for the rest of the year, the National Economic and Development Authority (Neda) remains confident that it is possible for the country to sustain a 7-percent growth this year.
Neda Acting Director General Augusto B. Santos said that with the announcement of a 7.3-percent gross domestic product (GDP) growth in the first quarter this year, the economy would likely sustain the growth as the global rebound boosts demand for Philippine products, among others.
“We expect the next three quarters to be able to sustain this first-quarter growth. We think, from all indications, the 7.3 percent may be sustained for the rest of the year. It is possible,” Santos said at the press briefing on the release of the first-quarter National Income Accounts on Thursday.
The Neda said growth will be boosted by the continuation of the global economic rebound, the renewed demand for electronics like computers, netbook and smart phones. There is also an increase in demand for semiconductors.
Director Dennis M. Arroyo of the Neda National Planning and Policy Staff said there is renewed confidence due to the change in administration, which is a “general feel” after the conduct of an election.
Arroyo added that growth will also come from the end of the El Niño, growth in food manufacturing, growth in business-process outsourcing and stronger consumer confidence. The reconstruction after the Ondoy and Pepeng typhoons will also continue to add to the factors sustaining growth.
Santos added that, traditionally, the first quarter of the year produces the weakest growth in all four quarters of the year. This means that, usually, the Philippines’ strongest quarter is the fourth quarter.
Neda also said that with all these, the upward revision of all macroeconomic targets for this year and next year will likely be revised upward. The government expects GDP growth to be within the range of 2.6 percent to 3.6 percent this year.
“The direction [of the revision] will be upward. We’ll revise it [targets] upward in the next few weeks. We have held for quite some time that [growth will be within the range of] 2.6 percent to 3.6 percent only to be conservative. With the data, the time for being conservative is over,” Arroyo said.
Economists’ reactions mixed
University of Asia and the Pacific (UA&P) economist Dr. Victor Abola said the 7.3-percent GDP growth is “for real,” and the gains of the economy in the first quarter will be sustained in the subsequent quarters.
Abola sees the same factors that propped up growth in the first quarter continuing, especially strong infrastructure spending, as evidenced by the robust real-estate sector.
The UA&P economist noted that condominiums built by local real-estate companies like the SM Development Corp. and DMCI Homes have sprouted in various parts of Metro Manila and elsewhere.
“The recovery is for real because of the large increases in employment. Apart from strong infrastructure spending, private residential construction was robust. Sustainable recovery is very likely,” Abola said.
For his part, former Budget secretary Dr. Benjamin Diokno said the 7-percent growth cannot be sustained by the economy. More investments in public infrastructure and improving public spending in general first need to be addressed, he said.
Diokno also cited the need to reverse the negative perception of political instability and high levels of corruption to improve the country’s overall business environment and attract more foreign direct investment (FDI), which the country lacks.
“The economy cannot grow at 7 percent on sustainable basis. We need to reverse the negative perception of political instability, high levels of corruption, and poor rule of law in order to attract FDI,” Diokno said.
Economists earlier said the country must increase its investment rate to around 20 percent to 25 percent in order to achieve long-term sustainable growth.
Philippine Institute for Development Studies president Josef T. Yap considers this as one of the biggest priorities of the next administration.
Increasing the investment rate to around 20 percent to 25 percent would be appropriate, Yap said. Currently, he estimates the investment rate at around 15 percent to 17 percent. –Cai U. Ordinario / Reporter, Businessmirror
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