Philippines sets ‘prudent’ growth target for 2015

MANILA, Philippines - The Philippines is targeting a seven percent to eight percent gross domestic product (GDP) growth for this year and the next as it hopes to continue the high trajectory of national growth that began in 2010, according to an official of the National Economic and Development Authority (NEDA).

NEDA Assistant Director General Rosemarie Edillon in a presentation at a wage consultation with the private sector recently said the growth target was actually a slight downgrade from an earlier goal of 7.5 percent to 8.5 percent.

Edillon explained that even a six percent to seven percent annual growth would be good “for as long as it’s sustained for at least 10 years,” pointing out that going too fast could lead to a bust, or the sudden collapse of economic activity.

She noted that as early as last year it was already apparent that just five quarters of over seven percent growth already saw the economy hitting constraints, including airport overcapacity, seaport congestion, road traffic, and power supply issues.

The existing infrastructure cannot yet sustain too rapid growth because of “many years of neglect,” she said. “So we think that this is the more prudent target for GDP growth.”

In 2014, the country missed its GDP target for full-year 2014 with actual GDP of 6.1 percent against the government’s target of 6.5 percent to 7.5 percent. Edillon attributed this mainly to underspending by the administration, saying it was the private sector’s momentum that enabled the 6.1 percent growth achievement last year.

NEDA’s optimism for the economy is shared by the private sector. For this year, ADB’s growth forecast for the country is 6.4 percent, Fitch Ratings 6.2 percent (and six percent in 2016), International Monetary Fund 6.6 percent (6.4 percent in 2016), Moody’s 6.5 percent, Standard and Poor’s 6.3 percent (six percent in 2016), and World Bank 6.5 percent for both 2015 and 2016.

Edillon said that to sustain this momentum, the country will continue the rebalancing process to reduce its vulnerability to regional and global shocks and generate more and high-quality jobs; improve the infrastructure network; enhance services focused on health, education and disaster-risk reduction; and “pass vital legislation that will help the economy to reach its highest potential.”

The NEDA Board has approved as of the end of January this year a total of 1,079 infrastructure projects with an aggregate cost of $24.31 billion. Of this total, seven have been completed, 58 are ongoing or under implementation, and 28 are for implementation.

On the other hand, there are at least 13 priority legislative measures the government seeks to pass, such as the Competition Law; Fiscal Incentives Rationalization, Customs and Tariff Modernization Act; amendments to the Build-Operate-Transfer Law, the Cabotage Law, and the Bangko Sentral ng Pilipinas Charter; and the National Land Use Act.

The country will likewise seize opportunities for expansion afforded by the US economic recovery, hosting of APEC in 2015, implementation of the ASEAN Economic Community this year-end, decline of global oil prices, and recent credit rating upgrade.