DOF targets 6.5-7% increase in GDP amid risks abroad

The Philippines could still achieve its economic growth target of 6.5 to 7 percent this year despite external risks, the Department of Finance (DOF) said Monday.

Finance Secretary Carlos Dominguez III cited the robust domestic economy with a healthy foreign exchange buffer, a strong banking system, and a young, educated workforce as among the key factors that will sustain the Philippines’ high gross domestic product (GDP).

Financial shocks from abroad, such as rising US interest rates and the possible surge of protectionist policies in certain countries that could affect trade, would not unduly threaten the economy, as the Philippines is not largely reliant on external trade as a growth driver, he said.

“I’m quite confident that this coming year, we will achieve the growth rates that we have set for ourselves, and that we will be in pretty good shape,” Dominguez said.

The DOF chief said that the country’s GDP expansion of 6.8 percent in 2016 pointed to a domestic economy in “pretty good shape” and well on its way to sustaining its growth momentum.

Dominguez said this gave the DOF all the more reason to aggressively engage in its proposed Comprehensive Tax Reform Program (CTRP)—and the Congress to swiftly act on it—so the Duterte government could raise enough funds for its pub- lic spending program on infrastructure, human capital, and social protection that would keep the Philippines among Asia’s fastest-growing economies.

Dominguez said the Philippines’ economic outlook remains highly positive, with the country having more than enough forex reserves to service its foreign debt.

Sectors of the economy have to diversify their products and markets and build resiliency to support higher growth, said the country’s chief economist.

Construction in the limelight

“In particular, we need to champion innovation and diversification in the industry sector as it is still heavily dependent on external demand,” said National Economic and Development Authority (NEDA) Director-General Ernesto Pernia.

Pernia said the services sector needs a policy environment that makes it easier for firms to set up businesses, as well as comply with regulations.

The NEDA chief said he also expects the industry and services sectors to remain strong this year.

“The construction industry will be in the limelight following the government’s commitment to implement critical infrastructure,” he said.