[Philippines] Philippine economic growth

From The Manila Times

By Cheryl M. Arcibal, Reporter

THE Asian Development Bank on Tuesday said the Philippine economy’s average annual growth rate was “too low” to effectively reduce poverty in the country.

In a speech delivered during an Asia Society forum, Haruhiko Kuroda, ADB president, also cited the dismal performance of Philippine exports in 2005 as another indicator that the country is lagging behind its East Asian neighbors.

“Eradication of persistent, pervasive poverty remains the Philippines’ major challenge. Economic growth at levels recorded over the past two decades, and the 4.7 percent to 5 percent expected for 2005 and 2006, is too low to promote more rapid progress in reducing poverty. Higher growth requires better public resource management and enhanced incentives for greater private-sector involvement,” Kuroda said.

“Fiscal deficits are constraining public investment while private investment is discouraged by a weak business climate. To create public fiscal space for spending on infrastructure, health and education—key ingredients for poverty reduction—better budget management is correctly the government’s medium-term macroeconomic priority,” he said.

The ADB chief said the decline in export earnings is “a clear warning that the country is participating less in the export expansion that is underpinning more rapid growth for most of the region.”

While the peso’s strength increased the attractiveness of the country as an investment site, the key issue that the Philippines must address is to catch up with other booming economies in the Asian region, he said.

Among the areas requiring reform include sectors still dominated by large government-owned and -controlled corporations such as the energy sector; restoration of higher levels of infrastructure investment; improvement in governance for a better delivery of essential services; strengthening of investment in human development; and boosting the competitiveness of sectors in which the Philippines has clear growth potential.

“This is a large agenda, and it will not be addressed in a short timeframe. It requires a sustained effort, rooted in the underlying recognition that building the microeconomic foundations of competitiveness in the Philippines is a key prerequisite if the country is to become an active participant in Asian integration and growth,” Kuroda said.