RP, PAKISTAN seen exceeding growth expectations IN ASIA

THE Philippines along with Pakistan are projected to exceed their historical average economic growth over the next two decades, faster than other Asian countries, according to Asian Development Bank (ADB). In its study titled, “Economic Growth in Asia: Determinants and Prospects,” the Manila-based lender found out that the gross domestic product (GDP) projections for the next two decades tend to be lower than historical performance of the 12 developing Asian economies.

GDP represents the amount of goods and services produced locally, and is a proxy for a country’s annual economic performance.

“Only in Pakistan and the Philippines did GDP growth projections turn out to be higher than past figures,” the ADB said.

The Manila-based lender projected that the Philippine economy, as measured by GDP for 2011 to 2020, and 2021 to 2030 are likely to grow at annual average of 5.96 percent and 5.53 percent, respectively.

These were higher than the actual annual growth rates of 2.02 in 1981 to 1990; 3.76 percent, 1991 to 2000; and 4.81 percent, 2001 to 2007.

From 1981 to 2007, the country’s annual GDP growth rate was 3.39 percent. The Manila-based lender said that GDP growth in the Philippines was driven by labor and capital in 80s and 90s.

While, in 2000s the total factor productivity (TFP) growth had gained the top spot among the sources of GDP growth, with a share about 45 percent.

TFP is a productivity measure combines labor and capital.

Labor growth was still second, contributing 28 percent and capital was a close third, accounting for about 20 percent of the total GDP.

ADB said that the TFP is projected to contribute more to GDP growth over the next two decades especially in Indonesia, South Korea, Malaysia, Pakistan, the Philippines, Thailand and Vietnam.

In the Philippines, TFP is projected to grow 2.2 percent for 2011 to 2020 and 2.03 for 2021 to 2030.

Other Asian countries

Pakistan is projected to grow 6.76 percent in 2011 to 2020 and 6.33 percent in 2021 to 2030.

Other Asian countries like China is estimated to grow 6.09 for 2011 to 2020 and 4.98, 2021 to 2030; Hong Kong, 4.40 percent and 2.83 percent; India, 4.67 percent and 4.28 percent; Indonesia, 4.66 percent and 4.12 percent; Republic of Korea, 4.39 percent and 3.42 percent; Malaysia, 5.51 percent and 4.79 percent; Singapore, 5.24 percent and 3.28 percent; Taipei, China, 3.68 percent and 2.48 percent; Thailand, 4.01 percent and 3.58 percent; and Vietnam, 4.86 percent and 3.74 percent.

“The region’s economic expansion has generally been marked by robust growth in capital accumulation. While labor input, education, and TFP have on the whole been positive as well, their contributions to GDP growth have been much more moderate,” the ADB said.

For Asia to continue growing strongly, the ADB said economies should either increase their rates of factor accumulation or raise productivity, adding that authorities can implement various reforms to achieve these.

“The majority of the 12 developing Asian economies have already registered high rates of capital accumulation in the past three decades, and the marginal productivity of capital is set to decline. But if the investment climate is kept attractive, such as through improvements in property rights protection, capital could continue to flow into the regional economies,” the Manila-based lender said.

In addition, the ADB said that improvements in productivity, such as through greater spending on research and development (R&D), could increase GDP growth in 2011 to 2030.

“Our simulation results confirm that improvements in government policy relating to education, property rights and R&D can increase our projected GDP growth significantly,” the ADB added.

In a reform scenario, the Manila-based lender said that GDP growth will increase by more than 1 percentage point in China, India, Indonesia, Pakistan, the Philippines and Vietnam.

This means that the Philippines GDP may grow at an annual average of 7.09 percent for 2011 to 2020 and 6.81 percent for 2021 to 2030.

“If Asia adopts growth friendly policies, it can continue to expand at robust rates in the next 20 years,” the ADB said. –DARWIN G. AMOJELAR SENIOR REPORTER, Manila Times