Experts still sunny on 2014 economic growth

THE country’s gross domestic product (GDP) rate slowed to 5.7 percent in the first quarter of this year, a development ascribed to the effects of Supertyphoon Yolanda (international code name Haiyan).

One of the most destructive storms in recent history, Yolanda devastated crops and disrupted supply chains, which negatively impacted food-manufacturing output. The tourism and insurance sectors were also hit by the effects of Yolanda.

Despite this, a full-year growth rate of 6.5 percent to 7.5 percent is still within reach, various experts said, citing strong household and private consumption spending, as well as a hike in public construction during the first quarter.

A couple of weeks ago Standard Chartered of the United Kingdom upgraded its Philippine GDP growth forecast for 2014 from 6.7 percent to 7.1 percent.

While this forecast was made before the release of the actual GDP figure, despite the recorded economic slowdown, the optimism shown by Standard Chartered and other analysts in favor of the Philippines is founded on sound factors, such as strong domestic growth, positive export growth, and the positive earnings momentum and outlooks of large corporations.

Meanwhile, French investors are interested in the Philippines, French Ambassador to the Philippines Gilles Garachon said in a news conference last week.

Historically, French Chamber of Commerce in the Philippines President Cyril Rocke added, the attention of French investors in the area has been in Vietnam because of the two countries’ shared experiences.

But with the Philippines emerging as a growth area in the region, French investors are exploring opportunities, and in line with this some French companies are hoping for direct flights between Paris and Manila to be initiated—a possibility, given that both countries signed a new air-services agreement in January.

Rocke said French companies are looking at opportunities in the consumer-goods, infrastructure, food-and-beverage and energy sectors. Recently, a delegation of 20 French companies visited the country to learn how they can do business here.

Many analysts agree that what are needed to enhance the business environment are significant improvements in infrastructure, particularly with regard to power, water and transport.

Laws and policies concerning the foreign ownership of assets also need to be revisited. Investors also need to be assured of political stability, and the continued implementation of good-governance policies and reforms for them to be encouraged to establish businesses over the long term, such as manufacturing.

Good governance is so essential and crucial to economic growth that the slightest hint of political instability or other untoward movements create an immediate impact.

An example of this would be the 18th annual Saint Petersburg International Economic Forum, held from May 22 to 24, which some US businessmen did not attend in protest over Russia’s actions in the Ukraine.

According to the Moscow Times last weekend, the “US, European Union and other developed economies have slapped sanctions on a number of Russian companies and top officials over Ukraine…. The high-profile falling out with the West has seen Russia’s investment image take a dive—only 8 percent of top executives worldwide have a positive view of Russia’s business climate, while 70 percent are pessimistic.”

The Russian economy sank to 1.3 percent last year, with the International Monetary Fund predicting a slow 0.2-percent growth this year. It has not ruled out slashing its forecast further.

All our efforts toward improving the economy and realizing the country’s tremendous potential for growth and accomplishment are being made with the aim to alleviate poverty. Among the factors that will boost growth are sound policies that protect and maintain natural resources, and promote their proper usage and sustainable development.

In order to ascertain the current state of our natural resources, the Philippines obtained $700,615 from the World Bank for a technical assistance grant for the Philippine Wealth Accounting and Valuation of Ecosystems, or Phil-WAVEs, project.

The project will concentrate on capacity-building and data generation to develop indicators for key national resources, such as minerals and mangroves, in order to assess and determine their value and contribution to gross domestic product, among other objectives.

Ensuring that the development of natural resources is sustainable will be a key step toward alleviating poverty, inasmuch as some lower-income demographics, such as farmers and fishermen, rely heavily on natural resources for their livelihood.

While we, perhaps, cannot expect a spectacular rebound of the economy in the second quarter, the signs still point to vibrant growth this year that should encourage more investments, particularly in high-growth sectors. –Atty. Jose Ferdinand M. Rojas II / Rising Sun, Businessmirror