Philippines lags ASEAN 6 peers in OECD outlook

MANILA, Philippines – The Philippines will likely grow by 6% this year, the Organization for Economic Cooperation and Development (OECD) said, a pace at the high end of the government’s target but lower compared to outlooks for 5 Southeast Asian neighbors.

Gross domestic product (GDP) growth from 2011-2015 is expected to average 4.6%, also lower than OECD forecasts for Singapore, Thailand, Vietnam, Malaysia and Indonesia, which with the Philippines comprise the ASEAN 6.

The Paris-based OECD, in a report released yesterday, forecast 2010 growth of 14% for Singapore, 7% for Thailand, 6.8% for Vietnam, 6.5% for Malaysia and 6.1% for Indonesia. For 2011-2015, the outlooks are 7.1% for Vietnam, 6.6% for Indonesia, 5.5% for Malaysia, 5.2% for Thailand and 4.7% for Singapore.

The OECD’s 2010 Philippine forecast compares to those issued by multilateral institutions such as the Asian Development Bank, International Monetary Fund and the World Bank: 6.2%, 7% and 6%, respectively, for the Philippines.

The country’s economic managers have said that changes to this year’s 5%-6% growth target were not needed, adding that a 7%-8% goal for 2011 will also be maintained for now.

Commenting on the outlook, Deputy Director-General Augusto B. Santos of the National Economic and Development Authority said: “With [public-private partnership (PPP)] investments, spending and other foreign direct investments, our growth will be comparable with our neighbors.”

The OECD report said the 6 Association of Southeast Asian Nations economies would post an average 7.3% GDP growth this year and 6% over the next five years, rebounding from the global economic crisis. The six grew by 6.1% in 2003-2007.

“Emerging strongly from the crisis, export-dependent Southeast Asian countries (Malaysia, Singapore and Thailand) have benefited considerably from China’s early rebound through their close trade linkages. Indonesia, the Philippines and Vietnam, with relatively large domestic markets, have also proven resilient to the crisis, as they were able to provide effective fiscal and monetary stimulus packages in the early stages of the economic downturn,” it said.

OECD economist Kiichiro Fukasaku said in a statement that the financial crisis offered Southeast Asian countries an opportunity to reassess past growth strategies and define new development objectives.

Kensuke Tanaka of the OECD Development Center, for his part, said: “Well-designed fiscal rules, independent fiscal institutions and medium-term budgetary frameworks consistent with national development plans still need to be created.”

The report said priority sectors — agro-based products, automotives, information and communications technology equipment, electronics, fisheries, health care products, rubber-based goods, textiles and apparel, and wood-based products — need to come up with additional niche goods to enhance the region’s competitiveness.

It recommended the development of more integrated infrastructure to foster connectivity, citing high transport costs and urban congestion as among the challenges. –Jo Javan A. Cerda, BusinessWorld