RP trails Asean peers in per capita income

Philippine per capita income would be able to pull alongside those of its Association of Southeast Asian Nations (Asean) neighbors only by 2015 despite a growth assumption of 10 percent this year onward, a senior official from the Bangko Sentral ng Pilipinas (BSP) said on Monday. In a presentation to reporters, BSP Deputy Governor Diwa Guinigundo said that the International Monetary Fund’s (IMF) World Economic Outlook (WEO) showed that the country’s per capita gross domestic product (GDP) ratio in the next five years will grow by only 0.98 of that of Indonesia, 0.33 of that of Malaysia and 0.54 of that of Thailand, all in the medium term.

GDP is the total value of goods and services produced in a country in a year.

“If we extend it 10 years to 20 years from now, the Philippines will catch up with Thailand only by 2028 and Malaysia by 2038. Those are based on very heroic and very hard assumption. But nonetheless we have to make that point that the challenge is very tough, but we have to do it,” Guinigundo said.

In July, the IMF said that Asia’s strong recovery from the global financial crisis continued in the first half of 2010, despite renewed tension in global financial markets.

“Economic activity in the region has been sustained by continued buoyancy in exports and strong private domestic demand. As envisaged in the April 2010 WEO, exports are being boosted by the global and domestic inventory cycles and by the recovery of final demand in advanced economies,” it added.

The IMF said that private domestic demand maintained its 2009 momentum across the region, despite less stimulative policy conditions and increased volatility in capital inflows and equity valuations after the euro area financial turbulence.

In particular, private fixed investment has strengthened on the back of higher capacity utilization and the still relatively low cost of capital.

Against this background, GDP growth forecasts for Asia have been revised upward for 2010, from about 7 percent in the April WEO to about 7.5 percent.

For 2011, when the inventory cycle will have run its full course and the stimulus is withdrawn in several countries, Asia’s GDP growth is expected to settle to a more moderate but also more sustainable rate of about 6.5 percent.

“The pace and drivers of growth will continue to differ substantially across the region,” the IMF noted.

Both newly industrialized Asian economies and Asean economies are expected to grow by about 6.5 percent in 2010, as a result of surging exports and private domestic demand, before moderating to 4.3 percent and 5.5 percent, respectively, in 2011.

Asean, groups Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

“Monetary policy requirements are more diverse for emerging and developing economies. Some of the larger, fast-growing emerging economies, faced with rising inflation or asset price pressures, have appropriately tightened monetary conditions, and markets are pricing in further moves. But monetary policy actions must remain responsive in both directions. In particular, should downside risks to global growth materialize, there may need to be a swift policy reversal,” the IMF said.

In Jakarta, Indonesian President Susilo Bambang Yudhoyono also on Monday set out his goal for boosting Southeast Asia’s biggest economy, aiming for 7.7-percent growth by 2014 and slashing unemployment.

“With careful planning and proper implementation, we are optimistic in reaching the target. Accelerating economic growth is expected to increase job opportunities and reduce the unemployment level,” he said.

In a speech to Parliament on the eve of country’s independence day, Yudhoyono pointed out that reaching the growth target will enable the government to create 10.7 million new jobs and slash poverty by 8 percent to 10 percent.

Yudhoyono is expected to unveil the draft budget for 2011 later Monday.

Southeast Asia’s biggest economy is currently expanding by about 5 percent.

It grew 6.2 percent in the second quarter of 2010 from a year earlier and foreign investment soared 46 percent in the first six months as confidence in the country continued to grow after the global financial crisis.

“It’s time that Indonesia not only walk, but walk faster and begin to run. It’s time that we don’t remain as a caged tiger but be a nation that is competitive in the international scene,” Yudhoyono said.

Indonesia emerged safely from the global downturn and its stock market is one of the best-performing in Asia because of strong domestic demand and strong exports of resources such as coal, palm oil and natural gas. –LAILANY P. GOMEZ REPORTER wITH REPORT FROM AFP