Why Philippines is growing slower than neighbors

MANILA, Philippines – The World Bank expects the Philippines to grow below the average for the Association of Southeast Asian Nations (ASEAN), with economists pointing to the need for increasing tax revenues, particularly from excise taxes on liquor and tobacco. In a report released on Monday, March 15, the multilateral agency said it forecasts the Philippines to grow 4.2% in 2012.

This pace of economic growth is slower than the 5.5% average forecast for ASEAN members but above the 3.4% predicted for the world.

The bank’s Philippines Quarterly Update (PGU) released on March 19 pointed out that “while Philippine growth has been generally higher in the last decade, poverty, inequality, and labor market outcomes have not improved as much.”

Philippines vs neighbors

“In terms of comparison, we are doing ok but we can do more. We should aim for 7% continuous growth for the decades to come,” said World Bank Country Economist Karl Kendrick Chua at a briefing with press on Monday, March 19.

He explained that the Philippines is not lagging behind its neighbors but broadly in line with them, explaining that many of those countries are coming from a high base growth of 7% to 8% that was maintained over several years while,  the Philippines, he said “averaged less than 3% in the last 4 decades.”

But he acknowledged that excise taxes in the Philippines are behind many of its neighbors’ rates.  –Katherine Visconti, http://www.rappler.com/business/2677-why-philippines-is-growing-slower-than-neighbors