First of three parts
Long graveyard shifts and cold call-center floors have been the norm in Justin Capiral’s workplace in the past three years. But the 22-year-old call-center agent continues to work and dream of better things for his future, even projecting to notch a major milestone this year.
By the end of 2016, Capiral hopes that his long hours in the call-center floor will bear fruit, and allow him the fulfillment of at least one of his dreams—to own a car. “I wasn’t able to achieve it last year because of the not-so-good salary from my previous company,” Capiral said.
Capiral believes that call centers, the main revenue earners in the business-
process outsourcing (BPO) industry, will continue to flourish in 2016. “The BPO industry is definitely one of the most dynamic and fastest-growing sectors in the Philippines,” he said.
Capiral’s optimism for 2016 is shared by economists and businessmen across sectors, with the May elections tagged as among the top growth drivers.
The BusinessMirror solicited the forecasts of economists, chamber heads and business executives for 2016. Based on the poll conducted, the average GDP growth forecast for 2016 is 6.35 percent, below the official 7-percent to 8-percent prediction for 2015 and 2016, but way above the average growth in the first three quarters of 2015, at 5.6 percent.
2015 disappoints
With the slow start for 2015, former Budget Secretary Benjamin E. Diokno noted that the country likely failed to meet the government’s target.
“It won’t diverge much from the first three quarters growth—5.6 percent. The higher government spending in Q4, assuming it is significant, will be more than offset by weak exports and the destruction on personal properties, farm outputs and public infrastructure owing to the two typhoons in late December,” the economist said.
The GDP for the first quarter of 2015 reached 5 percent. The second-quarter growth inched minimally to 5.8 percent, then climbed a little anew to 6 percent in the third quarter.
However, later in the year, several parts of the country were ravaged by typhoons Nena and Onyok, sending possible economic assets down the drain.
American Chamber of Commerce Legislative Committee Chairman John D. Forbes expressed his disappointment over the country’s performance in 2015, and said the country still faces the same challenges this year—high level of poverty, high level of unemployment and underemployment, and a rapidly growing population.
“The catch up that the country has to do with the competing
countries in Southeast Asia that have done a better job of economic growth in the last several decades,” the former American diplomat said.
“That said, the Philippines was one of the top GDP growth leaders in Asia again for another year, and that’s good,” he added.
[bctt tweet=”“PHL was one of the top GDP growth leaders in Asia again for another year”—John D. Forbes”]BPO employs 1 percent of population
BPO, the sector where Capiral has spent the past three years of his life, is among the biggest contributors in the country’s GDP. In 2014 employment in call centers rose by 17 percent, with over 1.052 million Filipinos employed by information-technology and business-process management (IT-BPM) firms. This means about 1 percent of the population is working in the BPO industry. According to
the National Economic and Development Authority, the sector aims to garner 1.3 million employees and $25 billion in revenues.
The expansion of services—from the conventional customer service to animation, content-marketing writing, graphic design, medical transcription, and software development and other emerging markets, as well as geographical range—helped in sustaining growth in 2015.
“Low inflation and strong external accounts—e.g., OFW [overseas Filipino workers] remittances, BPO growth, and tourism surge with the hosting of the Asia-Pacific Economic Cooperation summit—showed the strength of the economy. The
continuing fall in debt-to-GDP ratio is also allowing more government spending on infrastructure and basic services,” said Victor A. Abola, associate professor at the University of Asia and the Pacific (UA&P).
“The Philippines showed its weakness in implementation. Public construction started taking off only late in Q2 and big-ticket PPP [public-private partnership] projects are moving so slowly. The DOTC’s [Department of Transportation and Communications] poor performance and excuses reflect the overall weakness,” Abola said.
Govt spending misses in 2015
Senen Perlada, director of the Export Marketing Bureau, noted that had the programmed government budget been spent according to plan for 2015, the economy’s growth would have hit higher than 6 percent.
“You know if the planned government spending happened this year, we would have been 7 [percent] or greater,” he said.
Perlada said the government will be in a hurry to expend the remaining funds. “It will be on catch-up mode.”
He explained the vital role of the banking sector in the circulation of funds that will drive the growth of the economy. “You know the liquidity that is held by the economy, we are very liquid. ’Yung sa banking system ang dami, so lalabas lahat ’yan, magpapaikot ’yan.”
European Chamber of Commerce of the Philippines Vice President for External Affairs Henry Schumacher said the GDP growth for 2016 would be stable, but focus on sectors has to be maximized to increase productivity.
“Overall, it has been a good year, driven by consumption. To achieve sustainable GDP growth, there has to be more focus on infrastructure investments, and investments in manufacturing and agriculture supply chains, from agricultural products to finished food products.” Schumacher said.
Drivers and challenges for 2016
“I think, we could hit around 6 percent GDP growth in 2016. Looks like the US economy will strengthen, while China and EU will stabilize,” said Peter Lee U, vice dean at the UA&P’s School of Economics.
The poll conducted by the BusinessMirror garnered about 11 different economic drivers and 16 challenges that the Philippines needs to overcome for 2016.
The economic drivers included OFW remittances, BPO earnings, tourism, foreign direct investments, election spending, public-private partnerships, infrastructure spending, export and manufacturing.
Challenges noted were poverty, amendment of the Charter’s economic provisions, government spending, export financing, power, election results, El Niño and heavy vehicular traffic.
“It may well be at the same level, fueled by election spending. It will be essential for the country to attract much more foreign direct investment,” Schumacher said.
“GDP growth in 2016 would be in the neighborhood of 6 percent,
slightly higher than the 2015 GDP growth, mainly because of the May 2016 election spending,” Diokno
noted. Francisco F. del Rosario Jr., president of the Management Association of the Philippines, also remains optimistic that the country’s GDP growth will speed up a little for the year, with a 6.5-percent growth forecast.
Dr. Bernardo Villegas, a member of the UA&P Board of Trustees, projected a growth of up to 7 percent for 2016, to be fueled by OFW remittances, tourism, BPOs, manufacturing investments and housing, among others. The BusinessMirror looked into the top 5 growth drivers and challenges for 2016.
To be continued