BSP: More private-sector investment can help PHL avoid middle-income trap

The Philippines can avoid the dreaded “middle-income trap,” but the private sector has to do its share in sustaining the country's economic growth, the Bangko Sentral ng Pilipinas said Thursday. The “middle-income trap” is a situation in which a country enjoys robust growth rates and achieves a certain income level but gets stuck there, unable attain the economy of wealthier, industrialized nations. “To avoid the middle-income trap, one must increase investments and expand the economy’s absorptive capacity. Now is a very good time to do that given low interest rates and sufficient liquidity that can be tapped for investment activities,” said BSP Governor Amando Tetangco Jr. Tetangco also noted that increased government spending in recent years has helped drive the growth of the domestic economy. “Government spending has gone up over the last three years, and it has significantly contributed to the country’s growth. The private sector should now invest more and serve as the main driver of the economy,” he said. The International Monetary Fund earlier warned that developing Asian countries such as the Philippines are at the risk of falling into the middle-income trap, and that these economies should  invest more in infrastructure, education and social services, and strengthen government institutions. The IMF said that continued investment in these countries are necessary to sustain their growth and enable them to reach the status of industrialized nations. — BM, GMA News