[EDITORIAL] Challenges amid growth

November 21, 2017 at 13:00

EDITORIAL – Challenges amid growth

Despite the siege in Marawi, inflation, political noise and external factors, the economy grew by a better-than-expected 6.9 percent in the third quarter. This made the Philippines one of the best economic performers in the region, outpacing growth in China and Indonesia, although behind Vietnam’s robust 7.5 percent.

Economic managers attributed the Philippines’ performance to greater public spending and sustained strong growth in exports, which boosted manufacturing and services. While household consumption accounted for 55.7 percent of gross domestic product growth, however, the pace was slower due to inflation. Export growth also slowed in the third quarter, raising concerns about the sustainability of the GDP growth rate.

Growth can be sustained by other sources such as investments, but the country continues to grapple with disincentives to business, including red tape and corruption, restrictions on foreign ownership, poor infrastructure, high power costs and a weak regulatory environment.

Aside from sustainability, the persistent concern amid strong economic growth is the challenge of inclusion. Previous administrations have admitted that the fruits of economic growth have failed to reach the grassroots. The Duterte administration has made the right noises about making growth equitable and narrowing the income gap, but the nation is a long way from achieving these objectives.

A report released recently by the Association of Southeast Asian Nations secretariat in Jakarta together with China and the United Nations Development Program showed that nearly 90 percent of people classified as extremely poor in ASEAN live in the Philippines and Indonesia. The report tackled ways of maximizing financing to ease poverty and help ASEAN achieve UN Sustainable Development Goals.

Extreme poverty in Southeast Asia has fallen from 17 percent of the population in 2005 to seven percent in 2013, according to the report, but these people are vulnerable to returning to poverty. Even that small percentage also means 36 million people classified as poor, with 90 percent living in the Philippines and Indonesia. Lifting those millions out of poverty remains a daunting challenge as the Philippines registers strong economic growth.

Source: http://www.philstar.com/opinion/2017/11/18/1759987/editorial-challenges-amid-growth

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