The Philippines should achieve a long-term annual growth of 7 percent over the next decades to become an advanced economy and catch up with its neighbors, the National Economic and Development Authority said Wednesday.
Economic Planning Secretary Arsenio Balisacan said the country should not be comfortable with a growth of only 6 percent annually, if it wanted to join the ranks of modern economies.
“I will not be happy with that [growing 6 percent]. It will take you longer to reach the modern world. A 6 percent [annual growth] may take you until 2050 [or] 2055. You have to grow faster, otherwise, you will be left behind by Vietnam. You need to grow close to 7 [percent],” Balisacan said.
The inter-agency Development Budget Coordination Committee set the economic growth target for this year and 2016 at 7 percent to 8 percent.
Balisacan, however, said an annual growth of 7 percent, instead of 8 percent, would be more sustainable.
“What we need is to sustain the growth level. It is better to have a 7 [percent growth], rather than 8 [percent], which could be sustained. It would be very costly if we achieved very high rate in a year, and then it would fall [the next year]. The average growth would not be good,” he said.
The economy grew 5 percent in the first quarter and 5.6 percent in the second quarter, bringing the average growth in the first half to 5.3 percent, below the government’s target range of 7 percent to 8 percent.
Balisacan earlier conceded that the target of 7 percent to 8 percent might not be achievable this year. He said 6 percent was the “realistic” projection. To achieve a growth of 6 percent in 2015, the country needs to expand 6.7 percent or higher in the second half.
He said election-related spending might boost economic activities beginning the second half of 2015. “Our estimate is that election spending could contribute an additional 3 percentage point to growth,” he said.
Balisacan said next year, the implementation of infrastructure projects under the public-private-partnership scheme was also expected to spur the growth performance of the country.
“I think we have also many big PPP projects in the pipeline that we’re waiting for and are being implemented and will accelerate implementation. These will add to the impetus for growth in the coming quarters and years,” Balisacan said.
Multilateral lenders earlier reduced the growth forecast for the Philippines this year. The International Monetary Fund reduced the growth for the Philippines this year to 6 percent from 6.2 percent.
The IMF also revised downward the growth projection for 2016 to 6.3 percent from 6.5 percent.
The World Bank expects the Philippines to growth 5.8 percent in 2015 while the Asian Development Bank forecast a growth of 6 percent.
“The international observers, World Bank, IMF and ADB, all reduced growth forecasts and that’s very much expected, given the unforeseen changes in the global economy,” Balisacan said.
