MANILA, Philippines – Echoing Asia-Pacific leaders, the Organization of Economic Cooperation and Development (OECD) has highlighted challenges to make fast economic growth in the Philippines more inclusive and felt by the poor.
A day after the Asia-Pacific Economic Cooperation (APEC) concluded its meetings in Manila by underscoring support to help the region dent poverty with growth, the OECD, a group of developed nations, said local growth rates would remain high until next year.
“The Philippines has benefitted from strong momentum in domestic demand, buoyed by growing remittances. The Philippines also benefits from an improvement in its attractiveness as an FDI (foreign direct investments) destination,”said the report titled “Economic Outlook for Southeast Asia, China and India” released last Friday.
The local economy could grow 5.9 percent this year and six percent in 2016, down from 6.1 percent in 2014. Among the five biggest economies of Southeast Asia (Asean-5), the 2015 outlook is bested only by Vietnam’s 6.4 percent, while 2016 projection is the region’s highest.
Asean-5 groups Indonesia, Malaysia, the Philippines, Thailand and Vietnam
The forecasts compares with the Aquino administration’s six- to seven-percent and 6.5- to 7.5-percent targets for this year and the next. Economic growth slowed to 5.3 percent in the first half.
The OECD said the challenge remains on how to make growth trickle down to the masses, the key theme of this year’s APEC meetings held in Manila, where 21 leaders vowed to pursue inclusive growth.
“Despite the economy’s strong growth rates, job creation has been slow in the Philippines, posing challenges for continued and inclusive growth in a country with an expanding working-age population,” the report explained.
Much of what the OECD said mimicked APEC concerns. For one, OECD said support to micro, small and medium enterprises (MSMEs) would be vital considering they account for more than 97 percent of firms in the country.
Access to finance was one of the aims of the Boracay Action Agenda and the Financial Infrastructure Development Network during the APEC meetings this year.
“SMEs hold promise for helping drive growth, employment and local capacity development… however, SMEs face serious constraints that must be overcome including access to finance, skills, information gaps and maintaining product quality,” the OECD said.
Infrastructure, which is part of the APEC’s Cebu Action Plan, is also important, with the OECD applauding the Philippines’ increase in such investments to five percent of gross domestic product in 2016.
“Further work could be done to prevent delays in awarding projects, better manage the division of public and private sector risks, clarify the dispute settlement mechanism, and differentiate between national and regional responsibilities,” it said.
The OECD also recommended strengthening natural disaster mitigation and ensuring the availability of funds to easily respond to calamities. A disaster-resilient community is part of APEC’s five-year strategy for strengthening quality growth.
Across the wider emerging Asia, the OECD also shared APEC’s push for “widely shared” growth while creating “minimal impact” to the environment.
Emerging Asia includes the 10-member Asean, plus China and India
“While the structural policy priorities for Emerging Asia countries are highly diverse, many of these countries have set goals for improving inclusive and sustainable development, recognizing the need for high-quality growth and improved quality of life,” the report said.