THE PHILIPPINES may have lately seen multilateral organizations cut its growth outlook with much of Asia and the rest of the world, but even those reduced forecasts stand out amid the gloom, thanks to the country’s strong domestic economy, the Finance chief told a gathering of US businessmen late last week.
“Forecasts for global growth have been cut successively over the recent months. The slowdown presents headwinds on our own efforts to grow our economy,” Finance Secretary Carlos G. Dominguez III said in his speech at the start of the Philippine Economic Briefing Roundtable Lunch in Washington D.C. on Oct. 17, a copy of which was e-mailed to journalists on Sunday.
“But the Philippines continues to demonstrate strength, stability and resilience in adverse conditions. We hope to sustain our growth, relying on strong domestic demand to offset the general international uncertainty.”
Philippine gross domestic product (GDP) growth slowed to 5.5% last semester from 6.3% a year ago, weighed down by muted infrastructure spending due to delayed national budget enactment. But with state expenditures picking up this semester, the government hopes to hit at least the lower end of its 6-7% full-year target for 2019 that compares to 2018’s actual 6.2% despite slowing global economic activity.
After the latest reviews on Philippine economic prospects, 2019 GDP growth forecasts now stand at six percent for the Asian Development Bank, S&P Global Ratings and the ASEAN+3 Macroeconomic Research Office; 5.8% for the World Bank and Moody’s Investors Service; as well as 5.7% for the International Monetary Fund.
In his speech to US business leaders, Mr. Dominguez touted ongoing tax reforms, increased spending especially on infrastructure — exceeding five percent of GDP “for the first time in our history” last year — and human capital while maintaining fiscal discipline, stable monetary policy and controlled inflation, as well as declining unemployment and poverty, and a young population as some of the strengths that should enable the Philippines to weather headwinds from abroad.
“We will focus our accelerated spending program on infrastructure and our people, two investment areas that will provide the highest returns in the short term as well as into the future,” he said.
The United States was the second-biggest source of foreign direct investment (FDI) net inflows as of July at $96.97 million, up 13.4% year-on-year, according to latest available central bank data. It stood next to China in those seven months ($100.3 million, down 42.59%) and accounted for 2.4% of the Philippines $4.118-billion FDI net inflows in the same period that were 39.15% smaller than in the past year.
The US was also the fourth-biggest source of committed foreign investments approved by Philippine investment promotion agencies last semester, accounting for 5.9% of a P95.56-billion total at P5.678 billion, 24.5% more than a year ago, according to Philippine Statistics Authority (PSA) data.
Data from the Office of the US Trade Representative’s (USTR) Web site showed that US FDI stock in the Philippines was $7.1 billion in 2017, 12.5% more than in 2016, when President Rodrigo R. Duterte began his six-year term, led by manufacturing; wholesale trade; as well as professional, scientific and technical services. Philippines FDI stock in the United States was $750 million in 2017, up 1.4% from 2016.
PSA data also show it was also the top market for Philippine goods in the eight months to August, accounting for 16.429% of the $46.642-billion total Philippine merchandise exports in that period at $7.663 billion, up 9.416% from the past year.
USTR data also showed that sale of Philippine goods to the United States totaled some $12.6 billion in 2018, up 8.4% from 2017, with top categories consisting of: electrical machinery ($4.5 billion), machinery ($3.5 billion), animal or vegetable fats and oils (coconut, palm, babassu) ($535 million), knit apparel ($495 million), as well as optical and medical instruments ($485 million).
Philippine service exports to the United States totaled an estimated $6.5 billion in 2017, 4.8% more than in 2016, with travel; transport; as well as telecommunications, computer, and information services sectors making up the dominant categories.
USTR data also put the US trade-in-goods deficit with the Philippines at $3.9 billion last year, 22.5% bigger than in 2017, while its service trade gap with the Philippines was at an estimated $3.5 billion in 2017, up 0.5% from 2016.
“I hope to host the American business delegations looking for investment opportunities in our rapidly growing economy,” Mr. Dominguezzz said.
“Our alliance of long standing should be strengthened even more by forward-looking business partnerships.” — Beatrice M. Laforga