PHL to remain growth leader in Asia, but good jobs needed

THE PHILIPPINES will likely continue to be a growth leader in Asia until 2018 on the back of robust domestic demand and a recovery in regional trade, the International Monetary Fund (IMF) said in its latest report, noting that the country’s young work force will help boost the local economy.

“Asian trade is expected to recover, with net exports projected to be less of a drag on growth for most economies in the region owing to the improved global growth outlook and higher commodity prices,” the multilateral lender said in its Asia Pacific Regional Economic Outlook, titled: “Preparing for Choppy Seas,” that was released on Tuesday.

The IMF expects Philippine gross domestic product (GDP) to grow by 6.8% this year, coming from an upward-revised 6.9% expansion clocked in 2016 and well within the government’s 6.5-7.5% target for 2017.

If realized, this will place the Philippines as the third- fastest performer among Southeast Asian economies next to Myanmar’s 7.5% climb and Cambodia’s 6.9%. Outside the region, India is expected to be another growth leader with 7.2% growth, according to IMF estimates.

The multilateral lender said the Philippines’ sustained growth momentum will be “led by strong private domestic demand” and a “modest” recovery in exports.

Merchandise exports grew 17.4% in the first two months of the year, turning around from declines recorded in 2016’s comparable period, according to data of the Philippine Statistics Authority.

In previous reports, the IMF said that faster growth among advanced economies should help lift global prospects, spurring stronger demand for goods and services.

The IMF expects Philippine GDP growth to pick up to 6.9% next year and to continue outpacing many in Asia.

The Philippines’ young population is seen to give a boost to the economy, the report said, even as it clarified that much depends on the availability of good jobs and an increase in productivity.

While the Philippines can “still enjoy a substantial demographic dividend, the multilateral lender said: “It is important to note, however, that reaping the demographic dividend is not automatic, but depends instead on good policies to raise productivity and create a sufficient number of quality jobs for the growing working-age population.”

On the other hand, the IMF flagged rising protectionism among bigger economies that could affect “labor flows” and their remittances, which in turn could hurt the Philippines given its strong reliance on these inflows.

“More restrictive immigration policies in these traditional countries could reduce the migration out of Asia and diversify destinations to other economies, including within Asia,” the report read.

Remittances totalled $26.9 billion in 2016 and contributed to roughly a tenth of the local economy.