OECD sees PH economic growth as sustainable

The Organization for Economic Cooperation and Development (OECD) expects the growth of the Philippine economy would average above 6 percent in the next years on the back of strong consumption and fixed investments.

The OECD, an intergovernmental economic organization, said in a report launched on the sidelines of ASEAN Summit that the country’s economy, as measured by its gross domestic product (GDP), may average 6.4 percent from next year until 2022.

The OECD report noted that the growth forecast for the five-year period is about 50 basis points higher than from 2011 to 2015.

“Consumption and fixed investments, which grew 6.1 percent and 11.7 percent on average from 2011 to 2016, respectively, will continue to fuel economic growth until 2022,” OCED said.

The growth, the report stated will be mainly underpinned by robust remittance inflow from oversea works, planned big-ticket infrastructure projects and the residence of offshoring and outpouring industry. However, OECD also said that improvement in the country’s infrastructure is necessary to support its robots economic growth.

“While improvements have been made indecent years, additional capital and efficient investment will be need to keep up with demand for infrastructure development in the fast growing economy,” OECD said.

While the government is looking to attract investors for public-private partnerships (PPPs), OECD said there are challenges in this scene such as the absence of a deep long-term fund pool, which means that private project developers bear higher costs of credit.

“The PPP Center could be strengthened in terms of its mandate and resources,” the report said.

“While the bond market could provide an alternative source of financing, these markets need further development; the ratio of the total outstanding value of local-currently bonds to GDP remains relatively small,” OECD noted.

“Non-Traditional tools, such a levies to capture the appreciation in land value resulting form infrastructure development, could also be considered to raise revenues,” it added.

Southeast Asia is poised to maintain its growth momentum, averaging 5.2 percent per year from 2018 to 2022 on robust domestic private spending and the implementation of planned infrastructure initiatives.

Cambodia, Lao PDR and Myanmar are projected to grow the fastest of the 10 member countries in the next five years through 2022, while the Philippines and Vietnam are expected to lead growth among the ASEAN-5.

“In Malaysia, the Philippines, Vietnam and China, however, restrictions on FDI [foreign direct investment] in the communications sector are more stringent than those in the economy generally,” OECD said.

“Slow Internet speeds and challenges in online payment affect e-commerce and the digital economy more generally in the Philippines,” it added.