Despite the slower growth of the economy in 2014, economists, the government and the business community project brighter prospects for the Philippine economy in 2015.
The country’s average gross domestic product (GDP) growth in the first three quarters of last year settled at 5.8 percent, lower than the government’s target of 6.5 percent to 7.5 percent for 2014.
For Trade Secretary Gregory L. Domingo, the economy is seen to regain its fast growth this year after “resting” at 5.8 percent last year—correcting and adjusting from the booming 7.2-percent GDP growth in 2013.
In an interview, Domingo projected the country’s GDP to grow at 7 percent, or above, this year supported by the expansion of the manufacturing sector, sustained strength of the services sector, continuous flow of remittances, better performance of agriculture sector, rolling out of public-private partnership (PPP) projects, higher infrastructure budget, election-related spending due to the approaching national election in 2016, continuous decline in prices of oil products, and inflation rate slowdown, among others.
Alfredo M. Yao, the president of the country’s largest business organization Philippine Chamber of Commerce and Industry (PCCI), he also forecast the Philippine economy to expand better this year than in 2014.
Yao projected GDP growth for this year to settle at 7 percent to 7.2 percent.
His reason: Same as the DTI chief’s.
Investments in manufacturing sector are expected to continue
Both the Board of Investments (BOI) and Philippine Economic Zone Authority (Peza)—two of the country’s largest investment promotion agencies (IPA)—noted surge in investments in the manufacturing sector in 2014.
Approved investments by the BOI in the manufacturing sector last year increased by 78 percent to P24.5 billion from P13.8 billion in 2013.
Likewise, Peza recorded huge investments in the sector last year as four out of 10 biggest economic zone developers were for the manufacturing sector, while six out of 10 largest projects in the previous year were expansions from manufacturing companies.
The Bureau of Investments (BOI) and the Philippine Economic Zone Authority, which are under the DTI, expect investments in the manufacturing sector to continue with positive expectations of foreign investors in the country.
Both IPAs will continue to promote the Philippines this year as an investment destination, with focus in Japan and European countries for Peza, while BOI—aside from the traditional markets—will attract investors from South America.
Automotive industry will continue to perk up
The auto industry ended 2014 with a booming 27-percent growth in sales totaling 270,312 units.
The industry expects total sales this year to reach 300,000 units.
Recovering electronics sector
Positive outlook is seen for the electronics industry, both in trade and investments.
The World Bank has said that markets of electronic products already recovered. Thus, the Philippines—as one of the major electronics exporting countries in the region—will benefit from the recovering global electronics industry.
The Semiconductor and Electronics Industry of the Philippines Inc. said the industry’s exports in January to November 2014 period grew by 8 percent to $22 billion. Electronic products account for around 30 percent of the country’s total exports.
In terms of investments, Peza said the electronics industry will remain the top investor this year, particularly with the robust demand in the auto electronics.
Lower oil prices, higher purchasing power
The Philippines is a big beneficiary of the declining oil prices in the world market since the country is a net importer of oil products.
According to the World Bank, oil prices have decreased by more than 40 percent between January and December last year and is seen to further decline by an average of 31.9 percent this year. The World Bank added that this will push for higher household and business purchasing power, which can support consumption growth in 2015.
“Moreover, lower oil prices can boost the economy of the Philippines’s oil-importing trade partners, thereby increasing demand for Philippine exports,” the World Bank noted in its Philippine Economic Update published earlier this month.
Favorable exports sector
Aside from the benefit of falling crude prices to the export sector, the inclusion of the Philippines in the European Union Generalized Scheme of Preferences Plus (EU GSP+) will be favorable to the country’s exports revenue.
The EU GSP+, which took effect on December 25 last year, provides zero duty to 6,274 products from the scheme’s beneficiaries entering the EU market. The DTI expects exports to EU to increase by at least 600 million euros in the first few years of the GSP+ implementation.
Other countries can also take advantage of the Philippines as a gateway to EU markets with this GSP+. PNA
Rolling out of infrastructure projects
PPP projects that will boost the construction sector of the country will also back the economic growth of the country in 2015.
Citing the Philippine Economic Update of World Bank, there are P435-billion worth of PPP projects in the pipeline up to this year.
Eight projects have started their construction while seven others are expected to kick off this year.
On the other hand, the national government has committed to increase the infrastructure budget for this year to around 4.0 percent of GDP.
Kris M. Crismundo