Philippines needs 7% annual growth to reach ‘modern’ status – Balisacan

MANILA, Philippines - The Philippines needs to grow an average seven percent annually over the next 10 years to bring its economy at par with Thailand and Malaysia, the country’s chief economic planner said.

Socioeconomic Planning Secretary Arsenio M. Balisacan said at that annual average growth, the Philippines could reach the “modern world” where Thailand and Malaysia are in right now.

“The Philippines has to grow faster (than six percent yearly) otherwise Vietnam will overtake us,” he told reporters.

In fact, in the first six months of 2015, Vietnam emerged as the second fastest growing economy in the region, second to China, grappling the position previously held by the Philippines which still managed to hold on to third.

Based on data from the World Bank, Philippine gross domestic capital (GDP) per capital stood at $2,870, trailing Thailand’s $5,590 and Malaysia’s $10,933  and slightly edging Vietnam’s $2,052.

Balisacan said the country’s third quarter GDP must expand at least 6.7 percent to push economic growth at six percent for the whole of 2015, but still failing to hit the low end of the government’s 7-8 percent growth target for 2015.

The International Monetary Fund (IMF) slashed the country’s GDP growth forecast to six percent from 6.2 percent this year, and to 6.3 percent instead of 6.5 percent next year.

The Asian Development Bank has settled for six percent this year, while the World Bank forecasts the economy to grow 5.8 percent this year and 6.4 percent in 2016.

“The current situation is a temporary and it will go back to a faster pace assuming that we get our elections right,” Balisacan said.

“We also have many large public-private partnership (PPP) projects in the pipeline, while several are being implemented or its implementation accelerated. These will add to the impetus for growth in the coming quarters and years,” Balisacan added.

Other factors favoring strong growth are positive business confidence, consumer confidence, low interest rates, benign inflation boosting domestic consumption, strong revenues from overseas remittances, and robust domestic investments.