THE Philippine economy could grow by 6-7% over the rest of the current government’s term, assuming that momentum develops in foreign direct investment (FDI) and agriculture output, a leading economist said at the EastWest Banking Corp. Priority Midyear Economic Outlook.
“Our GDP (gross domestic product) will grow 6-7% annually for the rest of the administration. It will be one of the highest in the region for some time,” University of Asia and the Pacific (UA&P) Economics Professor Bernardo M. Villegas said on Wednesday at the bank-organized briefing.
The economy expanded 6.4% in the first quarter, slowing from the 8% posted a year earlier.
Mr. Villegas said the government should target investment levels approaching those of East Asian economies, which are equivalent to 25-40% of their GDP. The Philippine investment level is currently at 21-22%.
He also urged the government to target FDI of $15-20 billion, approaching Vietnam’s performance.
“Until last year, (foreigners could only own 40% of many businesses) and that’s why foreigners were not excited to come here. Forty percent is not enough for them to control their businesses,” Mr. Villegas said.
Net inflows of FDI fell 14.1% year on year to $876 million in April.
The Maharlika Investment Fund, if organized correctly, could be an instrument for ramping up FDI, Mr. Villegas added.
“I foresee the Maharlika Investment Corp. as a partner of foreign direct investors in infrastructure, renewable energy, and large-scale agribusiness,” he said.
Mr. Villegas added that higher FDI in the long run could lead to higher infrastructure spending.
“One reason why we have to get FDI (is that) our debt-to-GDP ratio is very high at over 60%. That’s unbearable. We have to bring that down,” he added.
Meanwhile, improving agricultural productivity and achieving food security will be another growth driver, he said.
Mr. Villegas said agriculture output will have to grow 2-3% to match the performance of other agricultural countries like Thailand and Vietnam.
“Vietnam is exporting five to six times the amount of agricultural produce than the Philippines. Vietnam, in 10 years, became the second-largest exporter of coffee in the world, surpassing Colombia and next only to Brazil,” he said.
Farm output grew 2.1% in the first quarter to P428.69 billion, compared to the 0.3% decline posted a year earlier and the 1% contraction in the fourth quarter of 2022.
The Department of Agriculture is targeting 2.5% farm output growth this year.
For 2023, Mr. Villegas is projecting economic growth of 6.5%. — Aaron Michael C. Sy