PHL economy undergoing ‘structural transformation’ amid external risks —Pernia

Cabinet officials trumpeted an expanding economy during the pre-SONA briefing on Friday for the third State of the Nation Address of President Rodrigo Duterte.

Economic growth hit 6.8 percent in the first quarter of 2018, comparatively lower than the 7-8 percent target set by the economic managers but among the highest growth rates in Asia.

“The economy is also undergoing structural transformation as growth is now increasingly being driven by investments vis-a-vis consumption on the demand side, and by the industry sector—manufacturing in particular—relative to the services sector on the supply side,” Socioeconomic Planning Secretary Ernesto Pernia said in a speech in Pasay City.

“This means that the quality of economic growth is improving, which implies that it is sustainable and able to generate quality jobs,” he said.

Pernia cited the “Build, Build, Build” infrastructure program, an ambitious P8.2- trillion endeavor to shore up the country’s lagging infrastructure.

The government aims to complete 32 of the 75 flagship projects by 2022 when the term of President Duterte ends, “while making sure that 4,909 other projects in the provinces and towns throughout the country will have broken ground by then.”

The government has committed to spend between P8 to 9 trillion on infrastructure development from 2017 to 2022.

Pernia said the country is on course to join the ranks of upper middle-income countries by end-2019 as the gross national income or GNI per capita grew annually by 4.8 percent in 2017, well above the target of 4.5 percent.

While commodity prices have risen in the first half of the year and “went slightly off target” at 4.3 percent due to higher prices of rice, fuel, and fish, “we see this to be temporary as we transition towards fully-implementing important public policy reforms,” he said.

Pernia noted the drop in unemployment rate to 5.5 percent in April was the lowest in 10 years.

The government aims to bring unemployment rate down to 4.7 to 5.3 percent this year.

“This year will be an important transition period, as we expect full implementation of many of our planned programs and proposed socioeconomic policies next year,” Pernia said.

The country is “on course” to achieve inclusive growth, Finance Secretary Carlos Dominguez III said at the same briefing.

He said the Duterte administration plans to bring down the poverty rate from 21.6 percent in 2015 to 14 percent by 2022.

“This means pulling up a million Filipinos from below the poverty line each year henceforth. This is the most important number we all hope to achieve,” Dominguez said.

“All development efforts will be meaningless if they do not translate into liberating our people from the curse of poverty,” he added.
 
Dominguez, however, noted that there are external headwinds such as the escalating trade spat between the United States and China.

“The global economy to be sure could pose numerous challenges to our growth in the coming period. We are looking at the possibility of increased protectionism and some uncertainty that could affect the oil prices,” he said in his speech.

“A full-fledged trade war could impair the global economy’s capacity to grow.”

Duterte will deliver his third report to the nation before a joint session of Congress on July 23.

Despite challenges, Pernia said the economic team is confident the country will meet the country’s macroeconomic targets and “further the national development agenda.” —VDS/MDM, GMA News