The Asian Development Bank (ADB) said the country’s local output growth, measured as the gross domestic product (GDP), could prove above 6 percent until 2015, according to an ADB Outlook (ADO) report for 2014.
The Manila-based multilateral agency said at the Philippines launch of the ADO that the country’s GDP is seen to increase to 6.4 percent in 2014 and to 6.7 percent in 2015.
The ADB said this would rank the Philippines as the fastest-growing economy in the 10-member Association of Southeast Asian Nations (Asean).
The country should also be the second fastest-growing developing member-country (DMC), second only to China, which is forecast to grow by 7.5 percent this year and 7.4 percent next year.
However, the ADO said inflation is seen to average higher at 4.3 percent this year and 4 percent in 2015. Nonetheless, this should still be within the Bangko Sentral ng Pilipinas (BSP) inflation forecast averaging 3 percent to 5 percent until 2016.
“[Our] GDP forecast is 6.4 percent for this year and rising to 6.7 percent in 2015. Growth is expected to ease from a high base in 2013, which was also an election year, despite a projected rise in exports. Net exports is also expected to remain a drag as imports will be strong in line of domestic demand. Inflation is expected to remain relatively modest [at] 4.3 percent this year and 4 percent in 2015 due to expected softening of global commodity prices,” newly appointed ADB Philippines Country Director Richard S. Bolt explained.
Bolt also said push factors that will drive the country’s GDP further include the increase in investments following the country’s credit rating upgrades last year and continued government infrastructure spending especially after Supertyphoon Yolanda.
No matter an expected rise in commodities prices, inflation should still be within government expectations.
Further, Bolt said the country’s exports will see some recovery this year and in 2015 and that a general improvement in the country’s macroeconomic fundamentals should help make the economy resilient to shocks.
Still, the ADB said much need to be done given the lack of jobs for many Filipinos. ADB said while economic growth exceeded 6 percent in the past two years, job generation has not been sufficient enough to reduce poverty.
The ADB said the country’s unemployment rate rose to 7.5 percent in January 2014 from 7.1 percent in January 2013, and the rate of underemployment remained elevated at 19.5 percent.
The multilateral agency noted that youth unemployment rate stood at 17.3 percent, up from 16.8 percent a year earlier and more than double the unemployment rate for the work force as a whole.
The government, ADB said, also needs to improve the quality of jobs since nearly 40 percent of the country’s work force is in the informal sector and therefore vulnerable.
“Although manufacturing grew at a brisk pace last year, it accounts for a small share of GDP and employment compared with other major economies in the sub-region. A stronger manufacturing industry would generate more and better jobs, and manufacturing linked to agriculture would enable the poor in rural areas to rise out of poverty. Manufacturing sector road maps are being prepared by the private sector and the government to identify constraints on growth in manufacturing and decide what type of support would address them,” the ADB said.
The ADO projects Asean to grow 5 percent in 2014 and 5.4 percent in 2015. The ADB also said major industrial economies such as the United States, European Union, and Japan will also post respectable growth rates until 2015.
The ADB also forecasts US economic growth to reach 2.8 percent in 2014 and 3 percent in 2015 while the euro-area countries will come out of recession and post 1-percent growth this year and 1.4-percent growth next year.
Japan, meanwhile, will post a growth of 1.3 percent this year and next year largely due to the introduction of the value-added tax. The tax measure takes effect this month. –Cai U. Ordinario, Businessmirror
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