PROVIDED the current macroeconomic policies are maintained, economists agreed that the Philippines could continue growing at more than 6.0 percent a year and per capita income would improve by 2022.
"I am optimistic that the Philippines could maintain the growth path because our macroeconomic fundamentals such as interest rates, inflation rate, dollar reserves, and the like have maintained their splendid growth track," said Cid Terosa, dean of the University of Asia and the Pacific School of Economics.
But he said it would take more than six years to achieve an upper middle income status for the Philippines based on World Bank standards on per capita income.
The Philippines is currently classified as a lower middle-income country.
In a press conference Thursday, Socioeconomic Planning Secretary Ernesto Pernia said the Philippine economy expanded by 6.6 percent in the last quarter on the back of high domestic demand in terms of investment and consumption.
This brought the average full-year gross domestic product (GDP) growth rate for 2016 to 6.8 percent, which is along the high end of the government's growth target of 6.0 to 7.0 percent for 2016 and the fastest in Asia with China growing by only 6.7 percent and Vietnam at 6.2 percent.
Pernia, who is also the National Economic and Development Authority (Neda) director general, was confident that the Philippines would continue along this growth path and likely hit the government target of 6.5 percent to 7.5 percent for this year.
Over the next six years, he said the economy is projected to expand by about 50 percent in real terms and per capita income would increase by over 40 percent.
"This should bring us to the upper middle income category standing by 2022. More importantly, we hope to reduce the poverty incidence to 14 percent by 2022, thereby lifting about 6 million Filipinos out of poverty," Pernia said.
Risks
He said, however, that there are downside risks, such as extreme weather disturbances, possible policy shifts in the US, greater volatility in capital flows, and geopolitical risks.
"The government needs to remain vigilant and consider potential repercussions to the Philippine economy," Pernia said.
He also cited the need for consistent and predictable policy statements to nurture entrepreneurship and attract investments especially outside of Metro Manila.
Pernia also stressed the need to make each sector resilient and diversified in terms of products and markets as well as ensure an efficient and transparent regulatory system.
"In particular, we need to champion innovation and diversification in the industry sector as it is still heavily dependent on external demand," he said.
"In the services sector, there is a need for a policy environment that makes it easier for firms to set up and operate businesses, as well as to comply with regulations," he added.
Fernando Fajardo, economics professor at the University of San Carlos in Cebu and former Neda assistant regional director in Central Visayas, said the Philippines may be able to sustain its current growth path "with the same economic policies still in place."
"There are many ifs, though," he added.
Fajardo cited the rise of the protectionist Trump administration in the US, which he said could trigger another global slump.
Other risks are China and its policies, the rising price of oil and the British exit, or Brexit, from the European Union.
Election year
Both Terosa and Fajardo attributed the 6.8-percent growth rate in 2016 to the increased economic activities related to the presidential elections.
Terosa said he had expected the rate, although he had projected a higher 6.9-percent growth. He said 6.8 percent is "a solid recovery" from the 6.3 percent achieved in 2015.
"The first half of the year boosted our economic performance through the flurry of economic and business activities related to the elections. The latter half of the year, however, was able to sustain the growth momentum," he said in an email to SunStar Philippines.
Fajardo, for his part, pointed out that in 2010, which was also a presidential election year, the economy grew by over 7.0 percent.
"We did even better despite the drastic slowdown in the second half of that year as government expenditures were curtailed," he said.
Pernia noted that the 6.6-percent fourth-quarter growth was lower than in the previous quarter, but this was expected in an election year due to the transition of government in the second half and the wait-and-see attitude of investors.
In a statement, the Philippine Statistics Authority (PSA) said the 6.6-percent fourth-quarter growth was the slowest in 2016, but it was higher than the 6.5 percent recorded in the same period of 2015.
Main growth drivers last year were the manufacturing, trade and real estate, renting and business activities.
Industry expanded the fastest at 7.6 percent while services decelerated by 7.4 percent and agriculture declined by 1.1 percent.
PSA said Net Primary Income (NPI) slowed down by 4.1 percent compared to the 11.5 percent growth recorded in the fourth quarter of 2015. As a result, Gross National Income (GNI) posted a growth of 6.1 percent, slower than previous year’s growth of 7.3 percent. On an annual basis, GNI accelerated by 6.6 percent, maintaining the NPI’s growth at 5.3 percent.
With the country’s projected population reaching 103.9 million in the fourth quarter of 2016, per capita GDP and per capita GNI grew by 4.8 percent and 4.4 percent, respectively. (Marites Villamor-Ilano/SunStar Philippines)