By Leslie D. Venzon
MANILA, Feb. 27 (PNA) — The Philippine economy is expected to accelerate to 6.8 percent to 7 percent this year and can grow further to 8 percent, boosting the country’s bid to become an upper middle-income economy by 2022, said a global economic and policy analyst.
In an exclusive interview with the Philippines News Agency, Dr. Dan Steinbock, founder and chief executive officer of the Difference Group, said this year’s economic growth mainly depends on infrastructure investments, jobs creation and manufacturing.
“Infrastructure, infrastructure, infrastructure. In other words, that’s the key for everything. It’s the same with all the larger emerging economies,” he said at the sidelines of a seminar organized by the Philippine Institute for Development Studies (PIDS).
Steinbock underscored the need to increase the country’s infrastructure spending to 7 percent of the gross domestic product (GDP) until early 2020s or “it might have to be even longer.”
He said the country should also focus more on boosting manufacturing productivity.
“To find jobs, manufacturing, even lower level manufacturing is really important. That was helpful in China, that’s how China was able to create its own growth curve; it was helpful Brazil and Russia as well. All these larger economies have made a difference,” he added.
Steinbock further said changes in the legislation concerning the foreign direct investments (FDIs) are also critical.
“… If you don’t have investment, if you don’t have capital and if you don’t have innovations, you can benefit from foreign companies. You allow them to come in but you ensure that the government, the private companies have their own stake in these,” he said.
Steinbock noted the Duterte administration likewise can shift its focus more from social to economic development.
He said a balance between the United States (US) and China could put the Philippines into “sweet spot” which would attract more FDIs from European countries, US, Japan and China.
“You have to understand that what happened in Southern Philippines, insurgencies are wasted human capital, wasted time, waste opportunities. If you can negotiate peace, start economic development, build infrastructure, make use of the resources, you could change things very fast,” he said.
Steinbock believes that the Philippines, now one or the fastest growing Southeast Asian nation, has potential for stronger growth between 7 percent to 8 percent.
“I think that there is a real chance for the Philippines to move very much to create an upper middle income economy,” he said. “Becoming an upper middle income economy by the end of Duterte’s term in 2022 would pave the way for a high-income economy by 2040.”
Steinbock said it is imperative that the Philippines achieve an inclusive growth.
“FDIs are very important in terms of fuelling growth but also creating employment and ensuring that it also inclusive growth. There has to be growth in the country but it has to be really inclusive enough,” he added. “You need to reduce poverty and the way to do it is through employment.”
The country’s GDP expanded to 6.8 percent in 2016.