MANILA, Philippines - The Philippines will continue to see robust growth in 2013 and 2014 based on strong domestic consumption and an increase in investments, but this expansion has yet to generate new jobs or reduce poverty levels, according to an updated Asian Development Bank (ADB) forecast.
The Philippine economy continues to show resilience to global market risks with a strong domestic demand, expansion in public and private investment, low inflation and interest rates, buoyant remittance flows, and higher business confidence, said Norio Usui, senior country economist at ADB, who spoke at an economic forum in Manila last week.
“Economic growth has been accelerating since the first quarter of 2012,†agreed Celia Reyes, a senior research fellow at the Philippine Institute for Development Studies who also lectured at the same conference.
The ADB’s revised Asian Development Outlook 2013 released earlier this month forecasts the country’s 2013 gross domestic product (GDP) growth at seven percent, up from six percent in its April estimates. For 2014, growth is now pegged at 6.1 percent, from the previous projection of 5.9 percent. Last year, growth reached 6.8 percent.
The ADB said the same growth drivers would continue to fuel economic activity in the short term, supported by the benign inflation and interest rate environment, ample liquidity, and a rise in government spending.
But Usui and Reyes noted that this growth is not creating more jobs or improving living conditions for many Filipinos, with over a quarter of all workers still unemployed or underemployed.
“Employment generation over the past two years has fallen short of the official goal of adding one million new jobs a year needed to absorb new entrants into the labor force and to put a dent in joblessness. Currently about three million people are unemployed and another 7.3 million don’t have enough work,†according to the ADB report.
The biggest challenge for the Philippines today is to strengthen the link between economic growth and development by creating a greater number and variety of productive jobs, said Usui.
Noting that employment growth is being driven largely by the services sector, he called for increased efforts to reinvigorate the manufacturing sector, which has been on a decline over the past two decades, to create more work for semi- or unskilled workers.
He also recommended structural transformation based on a clear, long-term vision, including the removal of long-standing barriers to growth, such as the high cost of doing business in the country.
“This requires sustained efforts to clear obstacles to direct investment, to upgrade infrastructure, and to make improvements to governance. The government must also step up work with the private sector to develop plans for the development of niche market industries in manufacturing and agribusiness on which the Philippines could capitalize,†the report said. – PHILEXPORT News and Features