Despite the threat of rising inflation, there is no stopping the engines of the Philippine economy from growing by 7 percent to 8 percent in the medium term, according to the National Economic and Development Authority (Neda).
In a presentation in Cebu on Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia said the economy is indeed in a “golden age of growth,” a “goldilocks period” that will allow it to provide more jobs and lift millions out of poverty.
Pernia added the economy has entered a goldilocks period, which means the economy was not too hot nor too cold. It means the economy’s growth was “just right.”
“Observers have remarked that the Philippine economy has entered the golden age, also known as the goldilocks years. It’s easy to agree because our economy has, indeed, been performing its best over the past nearly five decades. And we may not even have seen yet its very best ever, given the favorable circumstances the economy finds itself in,” Pernia said.
If the Philippines continues on this high economic growth path, Pernia added the country will hits its target of expanding the economy by 50 percent and per-capita income by 40 percent by 2022.
Pernia is also of the view that the Philippines is poised to breakthrough the upper middle income bracket by the end of the year or 2019, at the latest.
The country’s gross national income (GNI) per-capita income is at $3,550 in 2015. The government aims to reach a per-capita income level of $5,000 by 2022.
As of 2016 the World Bank said low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,025 or less in 2015.
Upper middle-income economies are those with a GNI per capita between $4,036 and $12,475, while high-income economies are those with a GNI per capita of $12,476 or more.
“With such level of growth, the economy would expand 50 percent by 2022 from its base in 2016. Likewise, per-capita income is projected to increase by 40 percent from $3,550 in 2015 to at least $5,000 in 2022, thereby elevating the country to be even better than upper middle-income economy,” Pernia said.
These targets will become achievable by pursuing a 14-point Key Policy Reform Agenda to sustain and/or accelerate economic growth.
Pernia added this includes the removal of red tape; easing restrictions on foreign investments; reforming the country’s tax system; ensuring timely execution of the budget; and seeking new export markets.
He said the agenda also includes lifting of the country’s quantitative restrictions on rice; diversifying high-value crops; investing in disaster resiliency; ensuring timely restoration in affected areas in Mindanao; and focusing on policy/reform agenda to avoid political distractions.
Other policy reforms are sustaining programs that target vulnerable population; strengthening science and technology investments; implementing a national ID system; and accelerating infrastructure development.
The last policy reform on infrastructure development embodies the spending of P7.74 trillion to implement 4,490 infrastructure programs/activities/projects under the Public Investment Program (PIP).
“Infrastructure development will be key in addressing the persistent and egregious inequality across our regions. Thus, we have ensured that regions outside the mega-urban centers are getting a fair share in the total number of infrastructure programs and projects over the medium-term,” Pernia said.
Out of the total 4,490 infrastructure programs and projects in the 2017-2022 PIP, some 161 projects have nationwide in scope while 4,231 projects are region- specific, of which only 320 projects will be in Metro Manila, he added.
The Autonomous Region in Muslim Mindanao will get the highest number of region-specific projects at 1,340. Further, over P49.5 billion will be invested for region-specific infrastructure projects in Region 7.
Pernia said that the government has also identified 75 key, large-scale, and game-changing infrastructure projects, which will be pursued by the Duterte administration to enhance connectivity and promote growth centers across the country.
Around 45 of these projects are in Luzon, 10 in the Visayas, and 17 in Mindanao. Furthermore, two flagship projects, namely the Luzon-Samar Link Bridge and the Leyte-Surigao Link Bridge, will enhance interisland connectivity in the country. Meanwhile, one project has nationwide in scope, namely, the Nationwide Fish Port Project.
The country’s recent economic success was observed in the country’s total factor productivity (TFP), which has steadily grown to 3.1 percent, maintaining its position as the highest among the Asean-6 countries.
In 2017 the Neda chief said the country’s TFP was at 2.3 percent, which has been the fastest in the Asean region.
The growth in TFP was an offshoot of the recent gains in manufacturing growth. Pernia added in the past five years alone, the manufacturing sector’s growth averaged 8 percent.
This, he said, allowed the economy to increase economic growth, which averaged 6.7 percent last year and 6.9 percent in 2016. Between 2010 and 2016, the economy posted an average growth of 6.3 percent, the highest average growth since 1980.
“The economy is also undergoing structural transformation as growth is now increasingly being driven by investments vis-à-vis consumption on the demand side, and by the industry sector—manufacturing, in particular—relative to the service sector on the supply side. In other words, the sources of economic growth have broadened and diversified,” Pernia added.