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Economic growth could again exceed target

Posted on February 26, 2014

THE ECONOMY could again grow beyond target this year, an analyst yesterday said, driven by increased investments and efforts to rehabilitate typhoon-devastated areas.

"We expect gross domestic product [growth] to reach 7.5-8% this year," First Metro Investment Corp. President Roberto Juanchito T. Dispo said at a Philippine Chamber of Commerce and Industry meeting.

The outlook was higher than a 7-7.5% projection announced prior to the release of 2013 GDP results last month. The economy grew by 7.2% last year, topping a 6-7% target, despite a fourth-quarter hit from natural disasters.

The government has set a higher 6.5-7.5% goal for 2014.

"The government has allotted around P404 billion in infrastructure this year. In addition, the government has allotted around P130 billion for the rehabilitation of areas affected by super typhoon Yolanda," Mr. Dispo noted.

"The silver lining of this calamity would be the rehabilitation component, which would bring a lot of employment and investments," he added.

Mr. Dispo also cited a pool of young and skilled workers who are driving consumption and investments in both services, particularly in business process outsourcing (BPO), and manufacturing.

"These four important factors will support this year’s growth," he said.

Growth could even be higher, Mr. Dispo noted, if the government is able to address issues such as lack of research and development investments and high power and unemployment rates.

Dan Steinbock, research director at the India China and American Institute, was also upbeat, saying: "I think the government projection of 7.5% is doable."

"The government’s own investments, BPO, and remittances will support this growth," he said. While "the growth can be sustained" due to strong fundamentals, however, "the problem is you have an international environment that remains uncertain."

Among others, Mr. Steinbock said the country would be affected by a rivalry between the US and China for regional influence.

Socioeconomic Planning Secretary Arsenio S. Balisacan, speaking at the sidelines of another forum, yesterday said the government was confident of meeting this year’s GDP goal.

For the first quarter, economic expansion "will depend on the rate of spending on the rehabilitation," he noted.