The Philippine economy, bucked post-election trends, soared to three-year high at 7 percent in the first three quarters, breaching the government's high-end goal of 6 percent to 7 percent growth for 2016.
Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director-General Ernesto Pernia was even optimistic about surpassing growth target for the year after gross domestic product (GDP) accelerated 7 percent in the first three quarters.
GDP rose 7.1 percent in the third quarter, its strongest in three years, mainly supported by strong private consumption. This makes the Philippines still one of the fastest-growing economies in Asia.
Pernia said sustained and deepened reforms are important to support economic growth, foremost among these are the comprehensive tax reform program being finalized by the Department of Finance and increased investments in infrastructure.
Emilio Neri, chief economist at the Bank of Philippine Islands, was surprised when the economy surged in July to September quarter, bucking post-elections trends, given the adjustments the government agencies undertook as they took on a new task.
"We won't be surprised if it is close to 7 percent again in the fourth quarter. I think growth is not an issue with this new administration. I think the bigger issue is managing the fiscal accounts because so far, the numbers that BIR (Bureau of Internal Revenue) show seems to imply that the collections are trailing the growth of the economy," he said in an interview.
Neri said the Department of Finance (DOF)-proposed tax reforms can enhance the existing administrative efficiency of the BIR.
The government is ramping up public infrastructure spending next year, allotting at least 5 percent of gross domestic product (GDP) for infrastructure projects until 2022.
"President Rodrigo Duterte has made clear that his administration will keep a deliberate focus on developing the regions through connective infrastructure," said Pernia.
Since June this year, the NEDA Board has so far approved 17 projects, many of them are projects located outside Metro Manila.
Among the approved projects include Phase I of the Metro Manila Flood Management Project, the EDSA Bus Rapid Transit Project, the Plaridel Bypass Road Project, the New Cebu International Container Port Project, the South Line of the North-South Railway Project, and the New Nayong Pilipino at Entertainment City and other agricultural and regional development projects.
The NEDA's Three-Year Rolling Infrastructure Program (TRIP), a joint project with the Department of Budget and Management, will assure that once an infrastructure program has been planned and rolled out, it will continue to receive funding from the government.
Neri expects the economy growing 7 percent again in 2017 especially "if the promised infrastructure programs are delivered."
He said the government needed to boost its ability to fund its ambitious six-year infrastructure programs, or the so-called Golden Age of Infrastructure of the new administration.
The economist also believes that the infrastructure program can help boost the economy, particularly the export sector, which is growing at modest single-digit pace.
"(Growth will be driven by) public spending. Like you saw in the third quarter, private construction was very strong because most of this private sector projects, or involving the private sector for the building of roads; and hopefully, the airports and train network we expected in Mindanao," he said.
Pernia expects the Philippines to sustain its growth momentum next year and 2018 despite risks, with GDP growing 6.5 percent to 7.5 percent and 7 percent to 8 percent, respectively.
"All things considered, our economy's continuing strong growth, decreasing poverty, lower unemployment rates, and new foreign investments this year are all good signs of things to come," he noted.
The NEDA chief said sustained strong growth, together with a low inflation environment, will pave the way for continued and faster poverty reduction.
"We see this momentum continuing next year and hopefully in the years to come," he added.
Pernia identified other reforms that will boost economic growth, including easing of restrictions on foreign investments, reduction of cost of doing business, strengthening agro-industrial linkages, and the fully implementation of the Responsible Parenthood and Reproductive Health (RPRH) Law.
To achieve inclusive growth, Pernia further said the Duterte administration would continue to prioritize agricultural development, along with increased investments in human capital to improve access to economic opportunities.
"High economic growth will mean nothing if the welfare of the poor and marginalized is not improved," he said.
Source: Philippines News Agency