|
THE
Philippine economy may not be able to replicate the
economic successes of 2007, but it can still turn out
high growth if it can address three key obstacles of
external factors, namely, the global economic slowdown,
revenue deficit and weak government policies against
corruption.
This is
according to Dr. Cielito Habito, director of the Ateneo
de Manila University’s Department of Economics, who
addressed the Information Technology Association of the
Philippines
(Itap) at its economic briefing Tuesday.
Reviewing the underlying reasons that caused high growth
in 2007, he listed low inflation, easing of the
unemployment rate and the record-high remittances of
overseas Filipino workers.
Despite
the many obstacles the country faces, Habito, citing
Ateneo macroeconomic models for 2008, predicted gross
domestic product growth at 6.2 percent to 7.2 percent.
What he
found disturbing in his research was where the new jobs
actually came from. The largest increase was in the
transportation, communication and storage sector and the
construction sector, creating over 260,000 new jobs.
He noted
a huge decrease in the agricultural sector with more
than 200,000 leaving for other jobs.
Ultimately, the sectors most responsible for pushing
growth beyond 7 percent was the mining industry (25
percent), real estate (21.6 percent), construction (19.5
percent) and private services (8.8 percent).
While
these figures are encouraging, Habito stressed that
growth is mostly attributed to government spending or
“pump priming” which was at 10 percent, up from 6.1
percent in 2006; and public construction spending, which
was 30.8 percent, up from 24.7 percent in 2006.
In the
financial aspect, the fiscal deficit was well within
target at P9.5 billion. However, this was mostly due to
privatization efforts by the government and, therefore,
cannot be replicated in the coming years.
In
foreign investment, the
Philippines
still has a long way to go with zero growth, which is
the smallest compared with its Southeast Asian
neighbors.
Habito
cited as another challenge the incidence of poverty
which worsened from the period of 2003 to 2006. This
spells an increase to 33 percent, or four million more
people, who became poor.
With
these problems, Habito posed the question of whether the
Philippines may replicate in 2008 the unexpected growth
of 2007.
The
answer, he said, is most likely a “no.” This is brought
by the external global factors, poor tax collection and
weak government policies, especially with regard to
corruption.
He
believes the global economic slowdown spearheaded by the
US credit crisis may not hurt the country directly but
more indirectly through its largest trading partner,
China. This is due to the fact that the US economy
represents 21 percent of China’s exports; and the fact
that China is also a major trading partner of the
Philippines
as well.
On poor
tax collection, Habito warned that taxes being the
government’s primary source of income, a weak collection
may cause complications in an economy’s cash flow.
Finally,
he cited the chronic problem of graft and corruption,
and the government’s current inability to counteract
them. These lead to a host of other problems, the most
recent of which were distrust in the government and
talks of leadership change, he said.
While
mostly unfounded, these general perceptions are hurting
the economy as potential investors adopt a more
conservative attitude to investing in the Philippines.
These
are the primary factors, Habito believes, that will
prevent the economy from achieving the same growth rates
in 2007.
In the
coming year, the government must focus on increasing
investments in the construction, mining, real estate,
agriculture and tourism sectors, said Habito, stressing
the high-growth potential of these sectors.
Overall,
the government must restore investor confidence, improve
broad-based growth, such as in small and medium
enterprises, increase revenue collection and lessen the
incidence of corruption. |
