TWO more economists are pointing that the upcoming May elections will do the country’s economy a lot of good.
In an economic briefing hosted by the Nordic Business Council Philippines, United States Agency for International Development Trade-Related Assistance for Development Project Head Dr. Cielito Habito and internationally recognized expert of the multipolar world Dr. Dan Steinbock said the Philippine economy will benefit in the coming elections.
“Election money is coming out of hiding even from abroad. It is the right time to invest in the country,” Habito said.
Habito cited that, during election period dating back to 2002, the Philippine economy has performed extremely well, with GDP averaging 7 percent as compared to nonelection years, which only averages 4.5 percent.
He also predicted that for this year, inflation will only range from 2 percent to 2.5 percent, employment rate reaching 94 percent; and the GDP hovering at 6 percent to 7 percent.
“The growth is internally driven with consumption, fueled by the overseas Filipino workers,” Habito said, while adding that the Philippines is immune to global shocks.
According to Habito, long term, the Philippines is in a demographic sweet spot with Asia’s aging population, but with the country and Bangladesh being the only exception.
Habito said that for the economy to sustain its growth, whoever wins the presidency must ramp up infrastructure investments; ease investment restrictions and reduce regulatory burden.
He added that there should also be a concerted effort to support micro, small and medium enterprises, wider competition and market stability, and increase investment in human capital.
For his part, Steinbock said the economic momentum achieved by the administration of President Aquino is strong enough to continue, but he added that foreign direct investments need to increase.
“In 40 major economies, if the poverty rate is significant, there is no inclusive growth. There are no jobs without foreign direct investments. The Philippine government is taking the right steps, but belatedly,” Steinbock said.
He added that the Philippines has a highly advanced business-process outsourcing sector, but it only employs 3 million.
Steinbock said the country needs to stop the outflow of human capital, citing what China did five years ago.
“You are exporting human capital away. The best and the brightest go abroad to find jobs. Reverse course and then something bigger will happen,” Steinbock said.
Steinbock also advised the Philippines to foster its economic relations with China.
“The Philippines could use Chinese investments. Reassess the relationship,” he said, while adding that Chinese economy will continue to grow at 6 percent for the rest of the decade.
Habito is a former secretary of economic planning and director general of the National Economic and Development Authority. He also served as director of the Ateneo Center for Economic Research and Development.
Steinbock monitors international business, international relations, investment and risk among the major advanced economies and large emerging economies. He is affiliated with India, China and America Institute in the United States, Shanghai Institutes for International Studies and European Union Center in Singapore.
Image credits: Alysa Salen