The Philippines must not rely solely on remittances from migrant Filipino workers and the business process outsourcing industry, and should instead improve both public and private investments to sustain the country’s economic growth momentum, the International Monetary Fund said Tuesday.
“There must be increased investments, both private and public. The legs of [economic] growth should be improved,” IMF resident representative to the Philippines Shanaka Jayanath Peiris said during a forum held at the New World Manila Bay Hotel in Manila.
“The investment leg needs to be improved… but I am not saying that there is anything wrong with the… remittances and BPO. While maintaining those two legs of growth, private and public investments must also be improved,” Peiris said.
Remittances fuel private consumption and are one of the backbones of economic growth. Money sent home by overseas Filipinos in 2015 rose 4.6 percent to a record-high $25.767 billion from $24.628 billion year-on-year, surpassing the 4-percent growth projection of the Bangko Sentral ng Pilipinas.
The 2015 remittance level represented 9.8 percent of the gross domestic product and 8.1 percent of the gross national income. Remittances and BPO revenues contribute around $50 billion annually.
Peiris said the Philippine economy had an enormous potential for expansion going forward, especially with its young population that could contribute significantly to the country’s output.
“There are also strong contributions potentially coming from agribusiness, tourism and mining sectors. The country’s economic fundamentals are solid and we need these to realize these potentials,” Peiris said.
Peiris also cited the country’s less exposure to Chinese trade, unlike its neighboring countries in the region, such as Indonesia, Singapore and Thailand.
He said the Philippines could also be affected by volatility in the global financial markets this year but “least affected” compared with its regional peers.
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said in the same forum the country’s resilience to both domestic and external headwinds could be sustained due to strong macroeconomic fundamentals.
“The Philippines entered 2016 from the position of strength. The 6.3-percent expansion in the fourth quarter of 2015 was the 68th consecutive quarter of growth,” Tetangco said.
Tetangco said 2015 was not actually a “calm” year but the Philippine economy managed to remain one of the fastest-growing jurisdictions in the Asian region.
Tetangco said some of the sources of global turbulence in 2015 were the anticipated interest rates hike by the US Federal Reserve, the Chinese economic slowdown, some geopolitical concerns and declining oil prices.