The Philippines is expected to continue enjoying favorable growth-and-inflation dynamics next year as more opportunities open up that could outweigh the impact of external headwinds.
In an investor conference call organized by the Investor Relations Office (IRO), economic officials told local and foreign fund managers and analysts, as well as other international stakeholders, that the 2017 targets of robust growth and modest inflation are achievable.
“Bottom line is that the Philippines is on a solid footing despite fragility of the global operating environment,” Francisco Dakila, Jr., managing director for monetary policy at the Bangko Sentral ng Pilipinas (BSP), said in the conference call.
For 2017, the government’s economic growth target is set at a range of 6.5 percent to 7.5 percent, while the inflation target is set at a band of 2.0 percent to 4.0 percent.
Should the targets be realized as projected by officials, the Philippines will continue to be on an enviable “sweet spot,” being able to post strong economic growth without suffering from runaway inflation.
Attainment of the growth target for next year will continue to make the Philippines one of the best performing countries in the region, said IRO Executive Director Editha Martin, who moderated the conference call.
Among the major Asian countries, the Philippines was one of fastest growing economies with average GDP growth of 7.0 percent in the first nine months of 2016, surpassing China’s 6.7 percent, but behind India’s 7.4 percent.
Economic outperformance of the Philippines is seen to continue even as the global economy enters 2017 with uncertainties arising from key challenges, including change in political leadership and anticipated rise of interest rates in the US.
There is also the continuing process of “Brexit,” and slowdown of China and other major economies.
The country’s buffers, particularly fiscal and monetary space, will help provide resilience to the domestic economy, officials said.
Dakila said inflation, which has been below targeted ceiling since 2009, is seen to slightly inch up from the estimate of below 2.0 percent this year to around the midpoint of the official target band by next year.
Price stability is expected to be supported by rising investments, which boost an economy’s productive capacity and, therefore, the supply of goods and services.
Rising investments are evidenced partly by increasing imports of capital goods, intermediate goods, and raw materials Dakila said.
Meantime, Socioeconomic Undersecretary Rosemarie Edillon said there are additional growth drivers starting 2017.
“We see certain growth opportunities beginning next year,” Edillon said in the same conference call.
The NEDA official cited progress of economic integration of the ASEAN region, a market of about 600 million people, which could spur Philippine exports. The process of ASEAN economic integration formally kicked off in December 2015.
Edillon likewise cited the administration’s infrastructure agenda, which is expected to go full swing in 2017, the first year that the government will operate under a Duterte-administration budget. Under the 2017 budget, the government is programmed to spend P860.7 billion on public infrastructure.
The amount is equivalent to 5.4 percent of the country’s projected gross domestic product (GDP) for next year, comparable to infrastructure spending in the Southeast Asian region of at least 5 percent of GDP.
In the past, the Philippines’ spending for public infrastructure lagged behind neighbors.
“We see the [growth] momentum to continue,” Edillon said.
11 December 2016
By Chino S. Leyco
