By Beatriz Marie D. Cruz, Reporter
THE PHILIPPINE ECONOMY needs to grow by an average of 8% annually to achieve its goal of bringing down poverty incidence to single digits by 2028, an economist said.
“I am confident that the 6-7% growth can be maintained over the next four to five years,” University of Asia and the Pacific Center for Research and Communication Director for Research Bernardo M. Villegas said at a briefing on Thursday.
“But that is not enough to bring us to a single-digit poverty incidence by 2028. We have to grow at least 8% GDP (gross domestic product) wise,” he said.
The government aims to reduce poverty incidence to 9% by 2028, or at the end of President Ferdinand R. Marcos, Jr.’s administration.
Economic managers have set a 6-7% GDP growth target this year and 6.5-7.5% next year. It also expects 6.5-8% GDP growth until 2028.
“I don’t expect that to immediately happen this year, for example. So, we should build that up… you will have President [Marcos] laying the foundation for the next president to be able to actually start growing at 8%,” Mr. Villegas said.
The Philippines’ poverty rate fell to 15.5% in 2023 from 18.1% in 2021.
Mr. Villegas noted that the Philippines has one of the highest poverty rates among Association of Southeast Asian Nations (ASEAN) countries.
Laos (32.5%) and Indonesia (18.1%) had the highest poverty incidence in ASEAN, according to the World Bank’s Poverty and Inequality Platform. Vietnam (4.2%), Thailand (0.6%) Malaysia (0.1%), have recorded a single-digit poverty rate last year.
To support growth, the agricultural sector must grow by around 3-4% every year, Mr. Villegas said.
Agricultural production, which contributes about a tenth to GDP, declined by 3.3% in the second quarter, the biggest drop since the 3.4% contraction in the first quarter of 2021.
Mr. Villegas also said the government must address the low investment-to-GDP ratio.
“Ours is in the low 21-22% and the main reason is we have the lowest savings rate in this region, anywhere from 25-35%,” he said.
In contrast, East Asian countries have an investment-to-GDP ratio ranging between 25% and 40%, Mr. Villegas said.
The government must also address corruption to bolster growth, he said.
“Corruption leads to leakage of P800 billion a year. If we can reduce that, then that will add to the 8% growth.”
The Philippines ranked 115th out of 180 countries in the 2023 Corruption Perceptions Index, up one spot from 116th in 2022.
MANUFACTURING
Meanwhile, Mr. Villegas said the Luzon Economic Corridor will help expand the country’s manufacturing sector.
“If the Americans and Japanese succeed in building the Luzon Economic corridor, our semiconductor and chips factories will grow double-digit,” he said.
The Luzon Economic Corridor is being undertaken through a trilateral agreement among the Philippines, United States, and Japan. It aims to strengthen connectivity in major areas in Luzon, namely, Metro Manila, Batangas, Subic, and Clark.
Growth in the manufacturing sector can be bolstered by the production of semiconductors and chips, Mr. Villegas said.
“The so-called Industrial Revolution 4.0, artificial intelligence, robotics, internet of things, data, will not be possible without chips. So, everything now will depend on those chips, and if we become a superpower in chips, that is manufacturing.”