Target: Faster than 7% economic growth

Faster than 7% economic growth

THE Duterte administration has to grow the economy faster than the Aquino administration did, if it hopes to achieve inclusive growth in the next six years, an economist said.

“Faster economic growth may not guarantee the improvement of the well-being of all those who are in poverty now or provide them with all the jobs that they need,” said economist Fernando Fajardo, “but this is even harder to do under slower economic growth like we had in the past.”

Fajardo and some members of the local business community gathered in the Casino Español last Friday for the mid-year economic forum hosted by the Cebu Business Club. Joining them was Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo.

From 2011 to 2015, the economy grew by an average of 5.8 percent, measured in terms of the gross domestic product (GDP) or the combined value of goods and services produced within a country in a year. The Duterte administration has been challenged to do better, and aim for seven to eight percent.

The new administration’s economic managers are projecting a six to seven percent economic expansion this year.

Will that be enough to make growth inclusive and sustainable?

“The six to seven percent growth will not be sufficient. We have a lot of catching up to do on infrastructure, poverty level, and housing backlog. If we want a quicker way, we have to grow the pie by seven to eight percent,” Guinigundo said.

From 2018 to 2022, the government’s target is between seven and eight percent.

During the second quarter of this year, the Philippines emerged as Asia’s fastest growing economy, registering a seven percent growth rate backed by the industry and services sectors. That was also at the height of election-related spending. China grew by 6.7 percent in the same quarter.

In the first quarter, the Phil- ippine economy expanded by 6.8 percent.

Fajardo believes the Philippines is capable of achieving nine percent growth once regions in the Visayas and Mindanao are “capacitated”.

Economic activities in the country are mainly concentrated in Metro Manila, Central Luzon, and Calabarzon, at the expense of growth opportunities in Southern Philippines, Fajardo said.

One way to do this, he said,

is by “deepening” indus- trialization in the country.

“The challenge of the new administration in the next six years is to surpass the performance in the last six years or accept the fact that our poverty and joblessness will continue for a much longer time than we want,” Fajardo said.

The Duterte administration has promised to invest more to develop infrastructure in regions outside the capital.

Despite rapid economic growth, poverty didn’t drop as fast in the previous administration. The Philippine Statistics Authority reported last March that 26.3 percent of Filipinos were poor as of the first half of 2015. That was down slightly from 27.9 percent in the same months in 2012.

An estimated 12.1 percent of all Filipinos were believed to be “in extreme or subsistence poverty” in the first six months of 2015, from 13.4 percent in the first semester of 2012.