Tuesday, February 06, 2007 Infra projects, high spending to sustain economic growth
WHILE others perceive the upcoming May elections to be “highly dramatized,” an economist believes it will further strengthen the Philippine economy.
“There are both positive and negative impacts expected during the Philippine election but the good economic shape of the country can be sustained,” said Nicholas Kwan, Standard Chartered Bank regional head of Research in Asia.
Kwan said he believes that while the foreign market generally perceives the Philippine elections to be critical, it will be different this year, however, since times have “been relatively smooth.”
“The effect is more on the positive rather than the negative,” he added.
According to Kwan, the Philippine election is bound to generate more spending as well as investments, but foreign direct investments (FDI) will not be the major investment driver.
Government infrastructure is seen to attract private sector participation and construction and communications sectors will be given a boost, he said.
Capitalize
Kwan said the country’s service sector will be the key area for growth, as more business process outsourcing companies, especially call centers, continue to capitalize on the Filipinos high proficiency in the English language.
He also said an improvement in telecommunications will lure more multinational companies to relocate in prime information technology (IT)-areas in the country, thus, it will be a contributory factor in the Philippine’s positioning as the next IT hub in Asia.
However, Kwan warned that while there is “more to gain than lose” during the coming elections, any drastic change, in terms of negative events, the Philippine economy could be jeopardized.
Instability
“We should not discount that this place has the ability to surprise people,” he said, adding that any negative event will affect the stock market and currency weakening can be anticipated.
Kwan said investors’ confidence could be negatively affected when the Arroyo administration turns more fragile, leading to political instability and an abrupt change in the government.
He said because of the volatile nature of the economic performance of the world market, the Philippines needs to further strengthen its political and economic platform to cushion itself from any negative effects of the election.
According to Kwan, the country also needs a solid pool of economic analysts that will assist in redirecting the platform of government officials toward improving the economic landscape of the country.
Kwan spoke during the 2007 Global and Philippine economic and investment perspective forum held last Feb. 1 at the Marco Polo Cebu Hotel. (MMM)
