THE PHILIPPINES remained one of the fastest expanding economies in Asia in the first quarter of 2018, as shown by the impressive gross domestic figures released early this month by the Philippine Statistics Authority (PSA).
The GDP grew 6.8 percent in the first three months of the year against the same period last year, with increased government spending driving the economy. The economic expansion was faster than the 6.6-percent growth in the fourth quarter of 2017 and the 6.5 percent in the first quarter of 2017.
The Philippine economy in fact has been growing in the last 20 years and has not experienced a contraction during this long period. It is, thus, safe to say that we have moved out of the boom-and-bust cycle that once characterized the Philippine economy, especially during the ā80s and ā90s when crisis after crisis, both caused by political distractions and natural disasters, disrupted our everyday life.
I expect the Philippine economy to sustain this strong growth momentum in the next year 10 years, or the remaining four years of President Duterteās term and the full six-year term of the next president. The next chief executive will be lucky in terms of economic management because he or she will inherit a strong economy. It is easier to push the economy higher when the growth momentum is on your side.
Data from the PSA show that the Philippines registered an uninterrupted growth pattern since 1999. The economy nearly contracted in the first quarter of 2009 when GDP growth was registered at just one percent. But the economy bounced back strongly in the succeeding years, expanding at a range of five percent to nearly eight percent every quarter.
The economy is on an extended winning streak and I see it growing further in the coming years.
At the rate the Philippines is growing, our economy may catch up with Thailand and achieve an upper middle-income statusĀ in two yearsĀ from a lower middle-income economy, as Economic Planning Secretary Ernesto Pernia earlier predicted. This means our gross national income (GNI) per capita will be between $3,956 and $12,235 as calculated by the World Bank compared with lower middle-income economies, or those with a GNI per capita of between $1,006 and $3,955.
Mr. Pernia noted that the first-quarter growth of 6.8 percent was the 10th consecutive quarter that the economy was able to achieve an output expansion of 6.5 percent or better. The growth, according to him, was at par with market expectations and close to the low-end of the governmentās full-year growth target of seven percent to eight percent for 2018.
The economy could have expanded faster, if inflation was more subdued for the period. Inflation in the first quarter averaged 3.8 percent based on the 2012 price index, near the upper limit of the target range of two percent to four percent for the year.
But the economy for sure is poised to expand more as the government accelerates its Build, Build, Build infrastructure program and increases its revenues through the Tax Reform for Acceleration and Inclusion, or the TRAIN law.
Building more roads, railway networks, airports, bridges and ports across the country directly generates more jobs. This, in turn, fuels consumption as more people join the labor ranks and spend more. The manufacturing and services sectors, meanwhile, will expand their output to meet the increased demand. The economy, sooner or later, will expand further.
Our businessmen are very much aware of the current economic boom. They are not just bullish, they are very bullish on the Duterte administration and have announced plans to expand.
You can read almost everyday about their investment plans in the business pages of newspapers. Many companies have committed to spend tens of billions of pesos in capital expenditures this year alone. That means more construction, more jobs and more economic activities.
The upbeat mood on the economy, of course, is due greatly to good macroeconomic fundamentals, political stability and the tough stance shown by President Duterte against corruption and the widespread drug problem. I think investors and the public in general appreciate his no-nonsense style in dealing with the corrupt and the drug menace. The people want to see and hear more of this tough stance.
Coupled with political stability, the economy is expected to sustain this high-growth trajectory in the coming years.
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This piece first came out in Business Mirror on May 28, 2018 under the column āThe Entrepreneur.ā For comments/feedback e-mail to: mbv.secretariat@gmail.com or visitwww.mannyvillar.com.ph./PN
