By Edgardo J. Angara
One year under the Duterte administration, the Philippines appears to be continuing the economy’s upward momentum. It has registered GDP growth for more than 70 consecutive quarters since 1998.
The economic managers are projecting that the Philippine economy will expand at the rate of 6.5 to 7.5 percent this year. Private sector economists predict a 6.2-percent GDP expansion this year and 6.5 percent for 2018. In the 2017 first quarter, actual growth was at 6.4 percent.
Continuing dollar remittances from overseas workers, from the IT-BPO outsourcing industry, and from surprisingly strong growth in exports appear to be the primary factors pushing the country’s upward climb.
There is a remarkable growth in the manufacturing industry. In April, the Philippines ranked 2nd among ASEAN, next to Vietnam, according to the Nikkei ASEAN Manufacturing purchasing managers’ index (PMI) — a monthly reckoning of the output, employment, delivery times and stocks of purchases of a country’s manufacturing sector. For the May and June indices, the Philippines already surpassed Vietnam to become ASEAN’s best in terms of factory expansion.
The country also scored better in the 2017 Social Progress Index — a survey by the US-based think tank Social Progress Imperative that measures a society’s capacity to meet basic human needs, sustain a decent quality of life, and create the conditions for citizens to reach their full potential.
The Philippines improved across 12 indicators — nutrition and basic medical care; water and sanitation; shelter; personal safety; access to basic knowledge; access to information and communications; health and wellness; ecosystem sustainability; personal rights; personal freedom and choice; tolerance and inclusion; and access to advanced education. Ranking 68th out of 128 countries (compared to last year’s 68th out of 133), the Philippines fared better than Indonesia (79th), Myanmar (96th), Cambodia (98th) and Laos (99th) among ASEAN countries.
These sanguine prospects notwithstanding, there are domestic risks that the economy is facing, including slowdown in government infrastructure construction, in business expansion, in tourist arrivals, among others.
The domestic risks are either solvable (such as the Philippine Contractors Association, Inc. (PCA) lament about government project pricing being quite low and about political intervention that delays the project) and PCA’s members’ own absorptive capacity. Or avoidable because the project is located in a virtual war zone or spurs minimal job-creation, or stimulates long-term versus short-term economic activity. Or inevitable because they’re unexpected events due to climate change (e.g. drought, floods) or acts of God (e.g. earthquakes, typhoons).
And the external environment adds some more future challenges to the Philippine economy. A growing protectionist politics will impact our inward remittances, trade and investment. An overhanging anxiety about the breakout of war over North Korea’s frequent nuclear tests affect our tourism and investment.
Let’s hope President Duterte’s second SONA will address these issues concerning the citizens and our foreign friends alike.
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