THE PHILIPPINE ECONOMY could grow by as much as 8-10% if the government can address the gaps in agriculture, investment, and good governance, according to economists.
“If President Ferdinand R. Marcos, Jr. meets these three challenges, we will reach 8-10% growth in the next five years,” University of Asia and the Pacific (UA&P) Center for Research and Communication Director for Research Bernardo M. Villegas said at a briefing on Monday.
He said the Marcos administration should aim for at least 2-3% agricultural growth every year to achieve the 8-10% gross domestic product (GDP) expansion.
Agricultural production, which contributes about a tenth to GDP, dipped by 0.1% in 2022 for a third straight year of contraction.
Economic managers have set a 6-7% GDP growth target this year, and 6.5-8% goal for 2024-2028.
Mr. Villegas said Mr. Marcos should also increase the “very low” investment rate in the Philippines to over 30%, which is the average in East Asia.
“We have the worst savings rate in Asia, we’re only saving 10% compared with our neighbors who have 25-40%. We cannot get it from local capital. (We need to) attract foreign direct investments (FDI), which he should target at $15-20 billion per year,” he added.
Bangko Sentral ng Pilipinas (BSP) data showed FDI net inflows declined by 8.3% to $7.635 billion in January to October. The BSP expects FDI net inflows to have reached $8.5 billion at the end of 2022 and $11 billion by the end of this year.
Mr. Villegas said the Philippines should also improve good governance.
“(Mr. Marcos) must fight corruption. If he can meet these challenges, we can reach 8-10% growth,” he added.
Based on the 2022 Corruption Perceptions Index (CPI), the Philippines ranked 116th out of 180 countries, up one spot from its worst-ever showing of 117th place in the previous year.
However, the country’s score was unchanged at 33 out of 100 in a scale that measures perceived levels of public sector corruption. A score of 100 means a country is “very clean,” while zero means it is “highly corrupt.”
6% GROWTH THIS YEAR
Victor A. Abola, an economist at UA&P, said the Philippine economy is likely to grow 6% this year or at the low end of the government’s 6-7% target.
“For GDP, I expect it to be 6% with the services sector providing the lead. Hotels and restaurants are continuing to open up and we expect more tourists, not only abroad, but domestic demand has been driving the hospitality sector,” he said.
The economy grew 7.6% last year, its fastest growth in 46 years. It also exceeded the government’s 6.5-7.5% goal.
“We do have some fiscal space especially given our debt-to-GDP ratio. Our fiscal space is bound to expand by 2024. We expect the (debt-to-GDP) ratio will start declining to 60.1% this year depending on the rate of growth of the economy,” Mr. Abola said.
The country’s debt as a share to GDP was at 60.9% as of end-December, better than the 63.7% debt-to-GDP ratio as of end-September but still above the 60% threshold considered manageable by multilateral lenders for developing economies.
The government is aiming to bring down the debt-to-GDP ratio to less than 60% by 2025 and 51.5% by 2028. — Luisa Maria Jacinta C. Jocson
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