PHL remains vulnerable to external shocks - ADB

Despite steady economic growth, a senior official of the Asian Development Bank warned that the Philippines remains vulnerable to external shocks such as weakening of major economies in the world. In a speech to the Foreign Correspondents Association of the Philippines on Thursday, Stephen Groff, ADB vice president, said the lack of diversification in Philippine exports makes it "quite vulnerable compared to its neighbors". The ADB sent a copy of the speech to the media. Groff said the high concentration of Philippine exports in electronics, particularly semi-conductors, was the reason for the slowdown in its exports in 2011, while peers in the region saw their exports increasing despite a global slowdown. The National Statistics Office has reported that from January to November 2011, Philippine exports dropped 5.6 percent to $47.296 billion. Although, Groff commended the Aquino administration's commitment to "improve governance and transparency", he said the e lower infrastructure spending of the government is another concern. "(S)pending will have to increase - a process that has now begun - to mitigate the impact of the deteriorating global environment," Groff said. To address these concerns, Groff said the Philippines must look for ways to improve its trade integration with neighboring countries to lessen the impact of external economic shocks. "The Philippines could also substantially expand its markets into other emerging economies. For example, trade with emerging economies outside of East Asia represented about one-quarter of Malaysia's total trade last year. For the Philippines, it was less than 5 percent. Increasing that share could help the country shore up growth for the future," Groff said. However, Groff said that economic growth must not be the ultimate goal of the government, but translating this growth to reduce poverty in the Philippines. Issues that need rethinking include job generation, infrastructure spending, coastal and marine environment protection, and governance and political economy. The Aquino administration has kept the 5 percent to 6 percent economic growth target for the year. In the January to September period of 2011, Philippine economic growth moderated to 3.6 percent, following a higher than expected 7.3-percent growth in 2010. Groff also said that to support Manila's effort, the ADB has allocated $3.8 billion to be spread out in six year for these programs. The ADB has forecast that Asian developing economies will grow 7 percent this year, a slight decline from 7.5-percent expansion in 2011.  -- CMA/OMG, GMA News