OECD fore­casts

Manila Times - - BUSINESS - GROWTH MAYVELIN U. CARABALLO

growth in 2017 sec­ond half an­tic­i­pated to be slightly faster than in

A clearer pic­ture of full- year growth will be avail­able on Thurs­day when the gov­ern­ment re­leases third quar­ter GDP data. A

poll of an­a­lysts re­sulted in a tight fore­cast range of 6.3 per­cent to 6.6 per­cent.

5-yr growth

The Cen­tre, mean­while, also said that av­er­age Philippine growth from 2018 to 2022 was ex­pected to reach 6.4 per­cent, bet­ter than the 5.9 per­cent recorded from 2011 to 2015.

“Pri­vate con­sump­tion, which has main­tained its share of about 70 per­cent of the econ­omy since 2000, will con­tinue to loom large,” it said.

A pro­posed re­duc­tion in the per­sonal in­come tax rate of a sig - wide, con­tained in pro­posed tax leg­is­la­tion, should con­trib­ute to con­sumer spend­ing mo­men­tum.

Con­sis­tent growth in re­mit­tances from over­seas work­ers is an­other pos­i­tive fac­tor and gov­ern­ment spend­ing is also ex­pected to gain mo­men­tum should planned ma­jor in­fra­struc­ture projects go for­ward.

“On the other hand, the in­vest­ment out­look is mod­est. Even though do­mes­tic and ex­ter­nal de­mand have been quite ro­bust, the pull­back in fixed in­vest­ment growth—from dou­ble dig­its since 2014 (peak­ing at more than 30 per­cent in sec­ond quar­ter 2016) to be­low 9.4 per­cent in sec­ond quar­ter 2017—sig­nals some ap­pre­hen­sion among in­vestors, al­beit not to a wor­ri­some de­gree at this point,” the Cen­tre noted.

Mean­while, it said that full lib­er­al­iza­tion of the bank­ing sec­tor and an in­creased fo­cus on e-com­merce ser­vices would at­tract in­ter­est among off­shore in­vestors in com­ing years.

Man­u­fac­tur­ing, es­pe­cially the

For the sec­ond bas­ket of projects, the Philip­pines and China agreed to line up an es­ti­mated $3.98 bil­lion in loans that could in­clude $947.64 mil­lion for the Su­bic-Clark Rail­way and $424.81 mil­lion for the Davao City Ex­press­way, which are still un­der­go­ing fea­si­bil­ity stud­ies.

The IFG said agree­ments for sev­eral of these projects would be signed by of­fi­cials of the two govern­ments dur­ing bi­lat­eral meet­ings to be held at the side­lines of the As­so­ci­a­tion of South­east Asian Na­tions (Asean) +3 (China, Ja­pan, Korea) Sum­mit this week.

Chi­nese Pre­mier Li Ke­qiang, who is rep­re­sent­ing Chi­nese Pres­i­dent Xi Jin­ping, is ex­pected to wit­ness the sign­ing of the bi­lat­eral agree­ments. semi­con­duc­tor busi­ness, is also well po­si­tioned to cap­ture op­por­tu­ni­ties pre­sented by im­prove­ments in ex­ter­nal con­di­tions, al­though is­sues re­lated to elec­tric­ity cost and sta­bil­ity re­quire fur­ther ac­tion.

On the other hand, it said that “com­mit­ments in busi­ness process out­sourc­ing have re­port­edly fallen, ac­cord­ing to the PSA (Philippine Statis­tics Au­thor­ity) … while anec­do­tal ev­i­dence shows that rev­enue growth is slow­ing down.”

In­vest­ments in the min­ing sec­tor were also said to have re­mained sub­dued in the ab­sence of a clear reg­u­la­tory frame­work.

In­fra­struc­ture

As high­lighted in the 2017-2022 Philippine De­vel­op­ment Plan 2017-2022, the Cen­tre said there was a need to ad­dress the coun­try’s un­der­de­vel­oped in­fra­struc­ture.

While im­prove­ments have been made in re­cent years, ad­di­tional are needed to keep up with de­mand in the fast-grow­ing econ­omy, it noted.

While the gov­ern­ment is look­ing to at­tract in­vestors for pub­licpri­vate part­ner­ships (PPPs), the think tank noted chal­lenges such as the ab­sence of a deep long-term fund pool, which means that pri­vate project de­vel­op­ers would bear higher credit costs.

“The PPP Cen­ter could be strength­ened in terms of its man­date and re­sources. While the bond mar­ket could pro­vide an al­ter­na­tive source of de­vel­op­ment; the ra­tio of the to­tal out­stand­ing value of lo­cal-cur­rency bonds to GDP re­mains rel­a­tively small,” it sug­gested.

Lastly, the Cen­tre said that non­tra­di­tional tools, such as levies to cap­ture the ap­pre­ci­a­tion in land value re­sult­ing from in­fra­struc­ture de­vel­op­ment, could be considered to raise rev­enues.

Aside from the loans, China has also pro­vided a to­tal of $ 148.22 mil­lion in grants of which $ 99.27 mil­lion will be used for the con­struc­tion of the Bi­nondo- In­tra­muros bridge and the Estrella- Pan­ta­leon bridge across the Pasig River to help ease traf­fic con­ges­tion in Metro Manila.

The grant, which cov­ers 100 per­cent of the to­tal cost for the projects, also in­cludes $22.95 mil­lion for the con­struc­tion of two drug re­ha­bil­i­ta­tion fa­cil­i­ties; $23 mil­lion to aid in Marawi’s re­ha­bil­i­ta­tion pro­gram, and do­na­tion of heavy equip­ment worth $3 mil­lion also for the gov­ern­ment’s re­con­struc­tion ef­forts in Marawi, the IFG said.

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