MANILA, Philippines - Former Finance Secretary Roberto de Ocampo expects the Philippines to post faster economic growth next year on the back of improving domestic demand and improving labor market.
De Ocampo told participants of a forum sponsored by the Asian Institute of Management (AIM) the other day that the country’s gross domestic product (GDP) expansion would accelerate to between three and four percent this year.
“This Philippines is fortunate to be in the right part of the world…,” the former Finance chief stressed.
According to him, domestic demand would strengthen supported by the 2010 election spending while the labor market would improve due to the rise in business confidence in the second half on the assumption of a smooth election and transition in government.
He pointed out that net exports are expected to make a slight contribution to GDP growth next year with the continued decline brought about by the global economic slump.
He said the National Government also intends to limit the budget deficit to P233.4 billion or 2.8 percent of GDP next year from P250 billion or 3.2 percent this year.
The budget shortfall this year is expected to reach as much as P320 billion due to weak tax collection and accelerated spending brought about by the implementation of the P330-billion Economic Resiliency Plan.
De Ocampo said next year’s budget deficit is expected to swell to P375 billion given the heavy spending needed to revive the economy.
The country’s GDP is expected to grow between 0.8 percent and 1.8 percent this year from 3.8 percent last year. The GDP expansion eased to 0.7 percent in the first three quarters of the year from 4.2 percent in the same period last year.
De Ocampo said the Philippines avoided a recession due to timely and monetary stimuli, revival of private spending, resilient overseas Filipino workers’ remittances, and others.
He said the Philippines would continue to face challenges next year despite the projected faster GDP growth. “Despite the Philippines’ projected growth for 2009 and 2010 hurdles will keep the Philippines from achieving pre-crisis level growth, top of which is a non-conducive business environment, as illustrated by the country’s dismal ranking in competitiveness surveys,” he lamented.
He also added that the government’s ambitious revenue targets may not be reached since it has not been able to win legislative approval for revenue-strengthening proposals such as the excise tax reforms and changes in fiscal incentives to investors.
The former Finance chief said there is an urgent need for government to strengthen revenue collections and boost investors’ confidence in order not to derail the projected economic growth next year.
He also cited the need for a smooth government transition after next year’s national and local elections.