2015, 2016 augur well for the economy PDF Print E-mail
Thursday, 08 January 2015 13:49



Recent moves by the government support my expectations of increased public spending in the next two years, which should help reverse the slowdown in economic growth in 2014.

The P2.606-trillion national budget for 2015 will boost spending for infrastructure, including the rehabilitation of Eastern Visayas and other areas damaged by natural disasters.

The government also hopes to accelerate the implementation of projects under the Public-Private Partnership (PPP) program, including eight projects worth about P625 billion.

Increased infrastructure spending will also contribute to the growth of the BPO industry, as it will open more areas outside Metro Manila for development as BPO hubs. This, in turn, will boost the real estate industry by increasing demand for office buildings.

The government says the tourism industry, which also stimulates the real estate industry and generates a lot of employment, is already recovering from the setback caused by the natural calamities in 2013. Tourist arrivals for 2014 are expected to reach 6.8 million and will continue to increase in the next two years to reach the target of 10 million by 2016.

Remittances from overseas Filipinos, both workers and immigrants, also continue to grow despite conflicts in some foreign countries.

Data from the Bangko Sentral show that cash remittances coursed through banks amounted to $2.2 billion in October 2014, up 7 percent from the same month in 2013. This brought the total remittances for the first 10 months of 2014 to $19.9 billion, higher by 6.2 percent compared to $18.7 billion in the same period in the previous year.

The Philippines is also attracting more investments, partly because of the numerous credit rating upgrades that international rating agencies have given the country.

In another report, the Bangko Sentral said foreign direct investments (FDIs) posted net inflows of $680 million in September 2014, more than double the net inflows of $314 million in the same month in 2013. For the period January to September 2014, net FDI inflows surged by 61.3 percent to $4.9 billion compared to $3 billion a year ago.

Even local investors are pouring capital on different projects throughout the country. In particular, the tycoons are very aggressive in investments, whether on their own or in partnership with other local or foreign investors.

Thus, we see big projects rising in Cebu and Iloilo in the Visayas, and in Cagayan de Oro and Davao in Mindanao, in addition to Mega Manila.

I believe FDI is one of the things that we lack. It is the missing link between slow or moderate growth and the fast-paced growth that we need to develop an inclusive economy.

Despite the temporary slowdown in 2014, the Philippine economy is ready to take off and the government must make sure that no other obstacle stands in the way, by continuing its reforms to make it easy for investors to do business here.

The Asian Development Bank (ADB) shares this optimistic outlook for the Philippines, citing robust domestic demand and investment, low inflation and interest rates, increased remittances and upbeat business sentiment.

At the same time, however, the ADB laments that growth has not been creating enough jobs, as more than a quarter of Filipino workers remain jobless or underemployed.

I mentioned the ADB’s observation both to serve as a reminder and as a challenge. The large number of Filipino workers who have no jobs or do not have enough income should remind us that the growth of the economy should include the objective of generating employment and livelihood.

For policymakers, the large number of Filipino workers who have no jobs or do not have enough income should be a challenge that must be addressed if we are to solve the problem of poverty.

In closing, let me greet all Filipinos a happy New Year! — For comments, e-mail mbv.secretariat@gmail.com or visit www.mannyvillar.com.ph. (BM)