7-8% GDP growth goal ‘attainable’ — BSP chief

By Melissa Luz T. Lopez
Senior Reporter

THE GOVERNMENT’s ambitious growth target remains doable despite falling short of expectations last semester, the Bangko Sentral ng Pilipinas (BSP) chief said, citing firm ground provided by favorable macroeconomic fundamentals and a young population.

“The government has set a growth target of 6.5-7.5% for this year, and 7-8% for 2018 up to 2022,” BSP Governor Nestor A. Espenilla, Jr. said in a speech on Wednesday.

“We believe these targets are attainable, given strong macroeconomic fundamentals, rising government spending on critical infrastructure and human capital development, increasing private sector investments and strong domestic consumption on the back of rising incomes of the country’s young and educated work force,” Mr. Espenilla said.

Philippine gross domestic product (GDP) expanded by 6.45% annually on average between January and June, and economic managers expect faster growth this semester as more infrastructure projects are rolled out.

The Bureau of the Treasury reported a P176.2-billion budget shortfall in the eight months to August, narrower than the P205-billion deficit logged as of end-July.

The World Bank has scaled down its growth forecast for the Philippines to 6.6% this year from the 6.8% pencilled in July due to the “slower-than-expected” implementation of publicly funded construction projects.

“The delay in the planned government infrastructure program has contributed to slower growth in investment spending, thus softening the growth prospect for the year,” the multilateral lender said in the October 2017 East Asia and Pacific Economic Update report it released last Wednesday.

The World Bank’s tempered outlook will still settle within the government’s target for 2017.

Mr. Espenilla said manageable inflation and sustained reforms designed to improve the country’s fiscal health should also provide firm support for the targeted growth spurt.

The overall rise in prices of widely used goods and services averaged 3.1% in the nine months to September, settling just below the midpoint of the central bank’s 2-4% target range but still a notch below the 3.2% forecast for the full year.

“This within-target inflation outlook essentially drives our policy decision,” the central bank governor added.

“We expect the combination of high growth and low inflation to be sustained on the back of the economy’s rising productive capacity and prudent conduct of monetary and fiscal policy.”

The BSP’s policy-setting Monetary Board kept borrowing rates unchanged during its Sept. 22 review, marking three years of policy stability as domestic conditions remain robust.

Mr. Espenilla said the peso’s depreciation against the dollar is also not setting alarm bells ringing, as the currency movement “complements” the country’s shift to an investment-led economy coming from a consumption-driven one.

For this year alone, infrastructure spending is programmed to reach P847.22 billion, accounting for 5.3% of GDP. The amount will rise to nearly P1.9 trillion in 2022, or 7.45% of the economy.

The government’s infrastructure push is seen to improve connectivity and the ease of doing business here, which in turn will bring in more investments, capital and jobs for Filipinos.

MINDANAO FACTOR
In the Philippines Economic Update: Preserving Consistency and Policy Commitment report it released yesterday, the World Bank highlighted Mindanao’s role in the Philippines’ quest for faster, inclusive economic growth.

“Economic progress in the Philippines will depend on the success of economic development in Mindanao, as it is hard to see how the country can achieve sustained and inclusive growth without progress in this region,” the Washington-based multilateral lender said.

Improving Mindanao’s economy by expanding its agricultural base and boosting its productivity is expected to yield gains that will spill over to the rest of the country.

“Increasing agricultural production in Mindanao could reduce food and input prices nationally, improve public welfare,and heighten the competitiveness of the Philippines’ agricultural sector since the region is considered the country’s agricultural food basket,” the World Bank said.

In 2016, Mindanao produced 22.53% of the Philippines’ unmilled rice, 49.10% of overall corn supply, 62.01% of coconut and 17.74% of the country’s sugarcane, according to data from the Philippine Statistics Authority (PSA).

It was also the main producer of the country’s pineapple, banana, mango and coffee products accounting for 88.86%, 82.77%, 34.18% and 79.14%, respectively, of overall supply.

At the same time, Mindanao currently has 37% of the country’s poor, according to the multilateral lender, while PSA data show the island contributed only 14.3% to gross domestic product last year. — with Elijah Joseph C. Tubayan