MANILA, Philippines - The World Bank (WB) hailed the Philippines’ better-than-expected 7.8 percent economic growth in the first quarter, with its country representative saying yesterday that the next step is to work for inclusive growth.
WB Country Director Motoo Konishi said the robust growth is “exciting†and indicated global confidence in what the Philippine government has been doing.
“I think it goes well with the next step, which is much more aggressive reforms that can be undertaken so that this whole growth can be shared equitably,†Konishi told The STAR shortly after news broke about the growth rate.
Konishi, who earlier said the country is poised to become Asia’s newest economic tiger, said the growth must be shared across the country and not just in Metro Manila.
He noted that this is what President Aquino’s administration has been espousing.
The growth rate, reported yesterday by the National Statistical Coordination Board, “shows the confidence that the business community has in the administration and the economy itself,†Konishi said.
He noted that the policy thrusts of the Aquino administration, with emphasis on transparency and good governance as well as commitment to improve the plight of the extremely poor, were similar to the tack pursued by the World Bank under its new president, Jim Yong Kim.
“It’s as if President Aquino’s social contract has become the World Bank mantra under (Jim),†Konishi said.
Asian Development Bank (ADB) Country Director Neeraj Jain lauded efforts by the government to make growth more inclusive.
“The current focus on job creation by crowding in private investment will help make economic growth more inclusive,†Jain said.
“As a key partner of the government, we will continue to support the government’s initiatives for inclusive growth,†he added.
“Increased and more efficient public spending had supported the economy, while strong remittance inflows and stable prices have continued to support robust private consumption,†Jain said. “This strong domestic demand has lifted the overall growth rate to a record high level.â€
Standard Chartered Bank, for its part, said the impressive GDP results confirmed its bullish view on the Philippine economy.
However, it warned that the growth might have adverse inflationary impact if not properly handled.
“At present, inflation is a secondary concern. We believe that investment growth is likely to accelerate on the back of sustained corporate optimism and the imminent construction of more Public-Private Partnership infrastructure projects. The current account is likely to remain supported by remittance inflows and services exports,†Standard Chartered said.
It noted, however, that the benefits of economic growth didn’t appear to have reached the grassroots.
“GDP per capita grew 6.1 percent, although some rating agencies are concerned that the country’s wide income inequality hinders the pass-through of growth benefits to lower-income groups,†Standard Chartered said.
Services exports, meanwhile, performed below expectations, declining 2.1 percent year-on-year in the 1st quarter.
“We believe this was due to the high base effect, and still look for growth in services exports for the remainder of the year. We also expect net exports to improve gradually, in line with global economic growth, over the course of the year. For now, sustained remittance inflows should ease concerns about a contraction in the current account surplus,†it said.
Budget Secretary Florencio Abad said they expect private businesses “to intensify their investments further in the local market and become lead players in the Aquino administration’s growth agenda.†– Donnabelle Gatdula, Prinz Magtulis, Aurea Calica, Delon Porcalla