THE Philippine economy has a potential growth rate of 6 percent this year and in the medium term, according to National Economic and Development Authority (NEDA) secretary Arsenio Balisacan.
This is a big improvement compared to the 4 percent potential growth rate of the country from 2012 to 2016, Balisacan said, nothing this was also his first stint as head of NEDA.
According to the World Bank, “potential growth” is the rate of expansion an economy can sustain at full capacity and employment. This is different from the actual growth rate.
“Based on the surplus we have, based on the environment, based on the institutions, based on our policies – what we’re seeing is the economy has a potential for 6 percent growth medium term potential. Of course, we are eyeing for a rate of 6 to 7 [percent]. We want higher than that, but 6 percent is quite a significant improvement in that potential GDP growth,” said Balisacan.
He cited indicators such as the improved labor market, higher employment rate, lower inflation, and good performance in various industries. He also pointed to high overseas remittances, growth in the tourism sector, and high domestic demand.
But Balisacan said he is not satisfied with a potential growth of 6 percent and the country should do more because it cannot grow beyond its potential.
“If you grow faster than your potential, you’ll overheat and that’s what can cause inflation. And that’s not going to be sustainable,” he warned.
He added the country needs “to elevate that potential” by investing in infrastructure and increasing the level of investment in the quality of labor through upskilling and rightskilling.
“We have to improve ease of doing business.”
He added that the government is doing these things so that a 7 or 8 percent potential growth rate can be achieved. (ABS-CBN News)
