Strong fundamentals will make the economy robust enough to withstand global shocks in 2016, a high-ranking official of an exporters’ organization said.
Sergio Ortiz Luis, president of the Philippine Exporters Confederation, said the country’s growth momentum would be sustained next year amid forecasts of headwinds in the global trade.
Ortiz-Luis said the nation would remain a “bright spot” in Asia through next year despite the global export slump, noting the view of international economists that Philippine “domestic drivers can sustain economic expansion despite external shocks.”
He said the economy had a number of advantages, including being relatively insulated from global upheavals compared with other more open economies in Asia. The Philippines, he said, had “strong fundamentals” and relied “a larger percent of growth” from domestic consumption.
Philippine exports fell by 10.8 percent in October, the seventh straight month of decline, due mainly to sluggish external demand. The October shipments were an improvement from the double-digit drop of 24.7 percent year-on-year in September, following the slight improvement in the global manufacturing industry.
“To ensure sustained growth, the government and private sector must continue to take steps together to boost the economy, foremost of which is to help micro, small and medium enterprises to increase competitiveness, especially by providing them access to trade finance,” Ortiz-Luis said.
He cited a need to widen financing options for MSMEs, “specifically by government allocating P20 billion in loans for MSMEs to directly tap without going through the usual collateral requirements, interest rate issues, strict repayment period and long documentation processes, among others.”
MSMEs account for nearly 100 percent of the country’s total establishments
and contribute around 61 percent to the country’s total employment and 35.7 percent of the total value added.
Ortiz Luis said the efforts must be complemented by domestic reforms and measures “to help smoothen the way to sustainable, competitive exports amid challenges.”
These include developing infrastructure, transportation and communications facilities to unclog roads and other bottlenecks, addressing loopholes in the supply chain, and promoting innovation and productivity.
The government earlier projected the economy to grow between 7 and 8 percent this year. However, anemic fiscal expenditures by the administration dragged down growth to just 5 percent in the first quarter, 5.6 percent in the second quarter, and 6 percent in the third quarter. This brought GDP average in the first nine months to 5.5 percent, significantly below the target range.
The government became too cautious to spend since the third quarter of 2014, at the height of the controversy surrounding the administration’s Disbursement Acceleration Program.