Philippine Economic Growth on Track to Lead Southeast Asia
VOA Saturday 31st December, 2016
Duterte aims to focus infrastructure development on rural Philippines, home to many of the country’s estimated 25 million impoverished people, Pernia told a news conference.
“We are carrying on with the macro-economic policies of the previous administration but ramping up infrastructure spending, promoting regional and rural development and investing heavily in human capital development, which includes health and education and nutrition,” Pernia told the news conference in a video replay.
To sustain the infrastructure push, the Duterte government in September began spending $6.46 billion on schools, hospitals, flood control and airports.
The Philippines economy normally relies on consumption, remittances from Filipino workers stationed overseas and call centers for multinationals with headquarters offshore.
English fluency and low wages drive call centers to the Philippines, and the Business Process Association of the Philippines estimates those centers earned revenue of $25 billion in 2016. Remittances totaled $14.6 billion in the first half of the year.
The Manila-based Asian Development bank forecasts 6.4 percent growth this year for the Philippines and 6.2 percent in 2017. The country has outpaced the rest of Southeast Asia for the past five years, Bajoria said.
Other Southeast economies
Elsewhere in Asia, Asian Development Bank forecasts the Philippine economic expansion would lag China and India. India’s GDP is expected to grow 7.4 percent this year and 7.8 percent next year.
Chinese aid to other parts of Southeast Asia may point to what the Philippines will receive. China is Malaysia’s top investor and contributes heavily to economies in Cambodia, Indonesia and Laos.
A China-Philippine maritime dispute that erupted in 2012 and culminated with a pro-Manila world court arbitration verdict in July kept relations cool until Duterte took office.
But economists caution against high expectations for foreign investment. Laws on foreign ownership discourage investors in sectors such as mining. Money from China could be loans or earmarked for specific projects of Chinese interest. Foreign direct investment came to 2 percent of the GDP in 2015, the World Bank says.
“The headline numbers are quite large, but at the same time some of those numbers are not like actual sort of investment – some of them are like loans,” said Christian de Guzman, vice president and senior credit officer with Moody’s in Singapore.
“Just because these announcements are made, any number of things can happen with regard to the implementation,” he said. “It’s not going to be as significant as a case like Cambodia, where, as a share of GDP, those investments are actually quite large.”