The government remains optimistic about the country’s growth prospects despite the downward adjustments in growth forecasts by the Asian Development Bank and Fitch Solutions Inc.
National Economic and Development Authority director-general and Economic Planning Secretary Ernesto Pernia said Monday the country’s strong macroeconomic fundamentals would be the key for the sustained expansion in the coming months.
“We understand the concerns of ADB and Fitch, but we remain confident about the strength and stability of the country’s macroeconomic fundamentals,” Pernia said.
ADB cut its 2018 growth forecast for the Philippines to 6.4 percent from 6.8 percent. The Manila-based lender also revised its 2019 outlook to 6.7 percent.
ADB’s revision came after Fitch Solutions, a member of the Fitch Group, last month recast its growth outlook for the country down to 6.3 percent from 6.5 percent.
“Our economy has been strong, growing by an average of 6.4 percent in the last eight years. This is the fastest since the mid-1970s,” Pernia said.
He attributed growth in the past years since 2010 to robust domestic demand, rising contribution of investments and the industry sector and high growth in total factor productivity.
The Philippine Statistics Authority reported that in the first half of 2018, the economy grew 6.3 percent, below the target range of 7 percent to 8 percent, weighed down by higher inflation rate, trade imbalance, sluggish agricultural output and the closure of Boracay and mining companies. Julito G. Rada
“While this is slower compared to that of last year, we have strong enough macroeconomic fundamentals to weather external risks. Our fiscal policy remains prudent, our external position is supportive of economic growth, we have a stable banking system, and measures to address high inflation are currently being prioritized,” Pernia said.
He said the government would continue to push for necessary policy reforms and faster implementation of its infrastructure program.
President Rodrigo Duterte also signed Administrative Order No. 13 last week, which will remove non-tariff barriers and streamline administrative procedures on the importation of agricultural products in a bid to counter high inflation.
The AO was released on Sept. 25, 2018.
“Besides short-term measures, we also need to look at long-term solutions like giving farmers access to farming technology and developing high-yielding varieties of rice and other vegetables. Thus, we are calling for the urgent passage of the Rice Tariffication bill,” he said.
The Duterte administration continues to ramp up investments in infrastructure to improve connectivity and reduce the cost of doing business in the country.
Pernia said that in terms of lessening foreign investment restrictions into the country, the Economic Development Cluster approved the draft of the 11th Regular Foreign Investment Negative List which would be the least restrictive among all FINLs. This is now with the president for his signature.