June 6, 2012, Manila Bulletin
World Bank (WB) Chief Economist for East Asia and the Pacific Bert Hofman stressed that the Philippine government’s public-private partnership (PPP) program can play a major role as more investments in infrastructure can create the jobs and income for the people’s needs.
He noted that preparing PPPs for bidding takes time, and perhaps the 10 PPP projects announced by the government for last year was a bit optimistic.
“But preparations for bidding them out have progressed and the government has a PPP center and expert support to make these projects ready, and I expect an acceleration in the program soon,” Hofman added.
In the medium term, Hofman believes that more infrastructure projects could increase productivity and growth in the Philippines as bottlenecks in infrastructure are a constraint on growth
He noted that the Philippine economy is now picking up at a stronger pace in the first quarter as government spending has accelerated. The GDP reported a growth rate of 6.4% in the first quarter of this year.
Last year, the economic expansion was subdued as the country was affected by the earthquake and Tsunami in Japan, which interrupted production.
“This year, the supply bottlenecks are no longer there, and government spending has accelerated,” says Hofman.
Hofman said that because of the country’s export composition heavily focused on electronics, they have not recovered as much as hoped for.
“Fortunately, consumption demand is holding up well, boosted by overseas’workers remittances.”
In other countries, including the Philippines, Indonesia and Thailand, investment still has not reached levels seen before the Asia crisis, says Hofman.
“Investments, especially in infrastructure, would increase demand and production capacity in the longer run.”
For 2012, the World Bank expects that East Asia will remain the strongest performing region, even though annual growth will further moderate as a result of a continued weak external environment.
Developing East Asia is projected to grow by 7.6 percent in 2012, with slower expansion in China pulling down much of the regional aggregate.
Poverty continues to fall, with the number of people living on less than US$2 a day expected to decrease in 2012 by 24 million.
Overall, the number of people living in poverty has been cut in half in the last decade in East Asia and Pacific.
“The risks emanating from Europe have the potential to affect the region through trade and financial linkages.”
The EU, along with the US and Japan, accounts for more than 40 percent of the region’s exports. European banks provide one- third of trade and project finance in Asia.
The World Bank is confident that most East Asian economies are well positioned to weather renewed volatility.
“Domestic demand has proved resilient to shocks, while most countries run current account surpluses and hold high levels of international reserves and banking systems are generally well-capitalized.”
The World Bank stressed that as external demand is likely to remain weak, countries in developing East Asia and Pacific need to rely less on exports and more on domestic demand to maintain high growth. (EHL)
