Phl to lag behind other ASEAN members in economic growth: OEDC report

MANILA, Philippines (Xinhua) – Despite its better than expected 6. 6 percent gross domestic product (GDP) growth last year, the Philippines will lag behind other members of the Association of Southeast Asian Nations (ASEAN) in the long-term if it does not adopt the needed improvements, according to the Organization of Economic Cooperation and Development (OECD).

In its report entitled “Southeast Asian Economic Outlook 2013,” the Paris-based OECD said that in many economic and development indicators, the Philippines can even be overtaken by newer and less developed neighbors if corrective measures are not implemented.

The OEDC Development Center report showed that a Filipino worker accounted for $10,000 worth of products valued in 2009 prices. This is barely above Indonesia’s level and below the ASEAN average, the OECD said.

The Philippines, along with Indonesia, Malaysia, Thailand and Singapore, are the founding members of ASEAN. The newer members of the regional grouping, formed in 1967, are Brunei Darussalam, Cambodia, Laos, Myanmar and Vietnam, all of which signed up in the 1990s.

Kensuke Tanaka, head of the Asia desk of the OECD think tank, said in a lecture delivered in Jakarta last week that among the five original founders, the Philippines ranked fourth in terms of labor productivity.

According to Tanaka, poverty incidence in the Philippines was the highest among the five with almost a quarter of the population living below the poverty threshold. This was almost the same as that in Indonesia.
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Philippine government officials have been candid in admitting that despite impressive economic growth, the problem of unemployment and poverty have persisted.

A report issued by the Integration Monitoring Office of the ASEAN Secretariat also showed that the Philippines has the lowest GDP per capita among the six oldest ASEAN members, including Brunei. Each Filipino accounts for only $2,300 a year, which is less than a quarter of the world average of $10,000.

The OECD has projected that in the next five years or until 2017, the Philippines’ real GDP growth will be 5.5 percent yearly, which would be at par with the figure for the entire ASEAN.

However, the four less developed members are expected to surpass this level with Vietnam growing by 5.6 percent; Myanmar, 6. 3 percent; Cambodia, 6.9 percent and Laos, 7.4 percent.

Indonesia’s growth will outperform its neighbors, with a 6.4 percent annual rate of expansion from 2013 to 2017. Malaysia and Thailand will see annual expansion of about 5.1 percent, and Singapore may grow 3.1 percent a year.

Like the World Bank, the OECD called for a more inclusive growth in the Philippines and urged the government to focus on improving road and power infrastructure, provide access to quality education, and ensure jobs for all job seekers.

The OECD report, however, has a generally optimistic outlook for the region in the years ahead.

It said that Southeast Asia’s growth will remain resilient over the next five years as stronger investment and private consumption reduce dependence on exports for expansion.

The OECD said that Europe’s sovereign debt crisis and a slowdown in advanced economies have had a “limited” impact on Southeast Asian nations with most of the effect experienced through trade.

Prospects for developing Asian nations contrast with the fiscal and demographic challenges faced by more advanced economies, as higher public spending and younger populations support domestic demand and lure investment even as global expansion weakens.

“A combination of cyclical factors, government policies, and longer-term shifts in economic structure that have supported consumption growth over the past several years are likely to continue to underpin its growth over the medium term in Southeast Asia, China and India,” the OECD said.

The report said that governments in Southeast Asia have loosened fiscal policies to spur growth, citing increased infrastructure spending by Philippine President Benigno Aquino III and Malaysian Prime Minister Najib Razak in their respective countries.