THE PHILIPPINES -- seen as a laggard compared with its neighbors --
needs sustained macroeconomic stability, additional revenues and
increased government spending if it is to equal emerging market peers.
Periods of growth were not sustained given the absence of strong and
persistent economic reforms, according to an International Monetary Fund
(IMF) Working Paper titled "The Determinants of Economic Growth in the
Philippines: A New Look."
"To catch up with its East Asian counterparts, the Philippines will need
to maintain macroeconomic stability, expand its fiscal space and
redirect public spending to agriculture, infrastructure, and research
and development," wrote author Willa Boots J. Tolo, who was a researcher
at the IMF Manila office and now an officer at the central bank.
She noted the Philippine economy was at par with the benchmark in
1965-1983 before it was hit by political unrest, a string of natural
disasters, and economic turmoil in 1984 that was followed by a
deceleration in per capita gross domestic product (GDP) growth. This was
followed by the lack of investments in agriculture, industry,
manufacturing and services.
The paper placed the Philippines in the same group with slower growing
emerging economies such as Argentina, Brazil, Colombia, Mexico and South
Africa.
The top performing emerging countries included Indonesia, Malaysia,
Thailand, China and India, while classified as moderately growing were
Egypt, Turkey, Mongolia and Pakistan.
For faster growth to be recorded, the government needs to increase its
fiscal space to help hike public investments, Ms. Tolo said. She added
that higher government spending would require "raising tax revenue
through both administrative and selective tax policy measures."
Also, "Better irrigation, access to fertilizers, farm-to-market roads,
and storage facilities could support development in the agricultural
sector."
Economic growth was just 3.6% as of September, well below the official
5-6% target and the 4.5-5.5% forecast. This prompted the IMF to cut its
full-year outlook for 2011 to 3.7% from 4.7% previously. -- N. J. C. Morales
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