The government should stimulate growth in agriculture, and capitalize on industries like quarrying, mining, construction and utilities to create more jobs.
Cebu economist Fernando “Perry” Fajardo recommended this action to sustain the 6.4 percent gross domestic product (GDP) growth in the first quarter of the year.
“There must also be more investment and capital from both private and public sectors to improve health and education,” said Fajardo, during an executive briefing of Cebu Business Club (CBC) members last June 22.
Fajardo, CBC executive director, warned that the government couldn’t sustain growth if it would continue to rely on the same drivers.
Fajardo was referring to the revitalized service sector, government expenditures, export, and the outsourcing industry.
“First quarter performance is not sustainable if we continue to rely only on these same growth drivers which are high risks and are easily affected by outside factors. One, export. The US economy is sluggish. Second, Europe is being threatened by another recession, and third, the slowing down of China,” he said.
Fajardo said the household consumption sector, which was also fueling growth, was threatened by a potential decline in overseas Filipino workers’ remittances, and the slowing down of the domestic economy due to the export slowdown.
The country performed well in the first quarter.
“The 6.4 percent GDP growth is very surprising because even the World Bank showed that the world economy will only grow by 2.6 percent with high income countries not doing well with their recovery. The Philippines was projected to grow by 4.2 perent only,” said Fajardo.
“Growth was mainly from the revitalized service sector which recorded an 8.5 percent increase. This sector includes tourism services like hotels and restaurants sector which grew by 10.9 percent, recreational, cultural and sports grew by 23.4 percent,” said Fajardo.
Government expenditures in private-public partnership projects also fueled the growth, said Fajardo as well as from the export services side that grew by 11.1 percent during the period.
He also said that consumption increased by 6.6 percent with about 60 percent of Filipinos spending mostly on food products.
“On the demand side, we see a growing demand for communication products (10.7 percent), recreation and culture-related services (22.3 percent), and restaurants and hotels (10.4 percent),” said Fajardo.
The first quarter growth of the Philippines surpassed that of neighbors in the region with Indonesia growing only at 6.3 percent, Vietnam with only 4 percent, South Korea with 2.8 percent, Japan with 2.8 percent, Singapore with only 1.6 percent and Thailand which had a negative growth of -0.3 percent.
“China grew 8.1percent but that is small compared to their usual growth of 10 percent to 11percent. That means they are in trouble,” said Fajardo.