MANILA, Philippines - The government may be bullish about hitting a growth of 7 percent to 8 percent every year until President Aquino ends his term in 2016, but the Paris-based Organisation for Economic Cooperation and Development (OECD) feels otherwise.
In its latest Southeast Asian Economic Outlook released on Tuesday, the OECD projects the Philippine economy to grow only by 4.5 percent this year.
And by 2016, the country’s gross domestic product (GDP) is seen to hit 5.1 percent. This translates to an average growth of 4.9 percent between 2012 and 2016, significantly lower than the growth of 5.7 percent in 2003 to 2007.
“Global uncertainties and natural disasters shed a negative light on the growth prospects of the region but compared with sluggish OECD economies, overall Southeast Asia will have a solid growth performance through 2016,” the report said.
On Monday the OECD urged policy- makers around the world to be prepared to “face the worst,” as the economic impact of Europe’s debt crisis threatens to spread around the developed world.
It said the continued failure by EU leaders to stem the debt crisis that has spread from Greece to much-bigger Italy “could massively escalate economic disruption” and end in “highly devastating outcomes.”
The half-yearly update also recommended urgently boosting the EU bailout fund and called on Europe’s central bank to do more to resolve the crisis.
The expected average growth of the Philippines is not far from its Southeast Asian neighbors, which, as a group, is seen to expand an average 5.6 percent between 2012 and 2016. This is also below the 6.1-percent average growth in 2003 to 2007.
In the medium term, the OECD said regional growth will be driven by Indonesia and Vietnam, which are expected to grow on average by 6.6 percent and 6.3 percent, respectively, between 2012 and 2016. The OECD expects Indonesia to grow by 6.9 percent and Vietnam by 6.7 percent this year.
The countries that are expected to post the lowest average growth in the medium term are Thailand and Singapore, which are expected to grow by 4.5 percent and 4.6 percent, respectively. This year, the OECD projects Thailand to grow by only 2.5 percent and Singapore by 5.6 percent.
“As growth in external demand moderates for the region, Asean economies are turning toward domestic drivers of growth in the medium term and are beginning to explore ‘green growth’ as an alternative strategy for long-term sustainable development,” the OECD said.
The OECD report comes a day after the Philippines said economic growth in the third quarter was a disappointing 3.2 percent.
On Tuesday Malacañang tried to be optimistic, saying the government would still strive to attain the 4.5-percent to 5.5-percent growth target for this year. It conceded, though, that this would be difficult, given the recently released third-quarter growth figures.
“It is going to be a challenge for us but we will try our best,” Presidential Spokesman Edwin Lacierda said, noting that the Department of Public Works and Highways, in particular, has increased spending by 23 percent in October, year-on-year.
“We expect the last quarter this year to improve because of the spending that we have done,” he said.