Philippines targets GDP per capita of $5,000 by 2022
Is the Philippines ready to handle disruptive technologies? This is one of the questions that SocioEconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Ernesto Pernia tried to answer during the 37th Annual Meeting and Symposium of the Philippine-American Academy of Science and Engineering(PAASE) at University of Arizona in Tucson on April 6, 2018 where Pernia was inducted into the PAASE Hall of Honor for 2018.
Pernia talked about the Philippine economy in general and the strengthening science and technology and innovation ecosystem in the Philippines.
Pernia said the gross domestic product (GDP) growth of the Philippines has been on a sharp monotonic uptrend over the last three and a half decades.
"I am happy to note that the GDP posted 6.7 percent growth for full year 2017, slightly above the lower band of our target range of 6.5 to 7.5 percent. As a result, we remain one of the fastest-growing economies in Asia, after China’s 6.9 percent and Vietnam’s 6.8 percent. The monotonic uptrend of the economy is a result of its going structural transformation," he said.
"This means that growth is increasingly being driven by investments vis-à-vis consumption on the demand side, and by the industry sector [especially manufacturing] relative to the service sector on the supply side. In other words, the sources of economic growth have diversified. Such qualitative change enables the economy to sustain growth and generate more stable and quality jobs," Pernia said.
Total factor productivity (TFP) growth of the economy in recent years has been the fastest among ASEAN-6 countries – averaging 3.01 percent over the period 2010-2015, based on computations by the Asian Productivity Organization.
"Overall, the country’s external position remains favorable, characterized by strong flows of foreign investments, remittances, healthy current account, and declining external debt [23.4 percent as of the third quarter of 2017]," he said.
Pernia said the government has been able to increase investments in human and physical capital. "For infrastructure, we will raise spending [cash basis] from about 4 percent of GDP in 2017 to over 6 percent by 2022, or an investment of US$130 Billion (PhP6.8 trillion) over 6 years, making this administration’s term the 'golden age of infrastructure' in the Philippines," he said.
He said the plan for 2017-2002 is to invest in 5,636 priority programs and projects amounting to US$203 billion (PhP10.6 trillion as of October 2017; obligation-based).
Based on Chapter 19: “Accelerating Infrastructure Development” in the PIP 2017-2022, a total of 4,490 infrastructure programs/activities/projects (PAPs) on transportation, water, energy, information and communications technology (ICT), social and other public infrastructure, with total investment requirements at US$148.3 billion (PhP7.74 trillion, obligation-based), will be implemented by the government over the medium-term, he said.
To date, 24 out of the 75 flagship projects have been approved by the NEDA Board and/or are ongoing/under implementation.
"Importantly, the higher pace and improved quality of economic growth has created more and better jobs. Unemployment registered the lowest at 5.5 percent in 2016 but inched up a bit at 5.7 percent in 2017. Nonetheless, underemployment registered the lowest rates over the past decade at 16.1 percent in 2017, which signals that the quality or stability of work being generated is improving," Pernia said.
"Recent result of the LFS continued to show a vibrant labor market, total employment increased by 6.1 percent in January 2018, reaching 41.8 million with an estimated 2.4 million net employment generation relative to January 2017. Meanwhile, unemployment rate was estimated at 5.3 percent in January 2018, the lowest unemployment rate recorded for all January rounds in the past decade, in line with the Philippine Development Plan (PDP) target of 4.7 to 5.3 percent for 2018. However, underemployment increased to 18.0 percent, although underemployment in areas outside of NCR remains within the PDP target of 17.8-19.8 percent for 2018," he said.
"Given the foregoing, we are targeting an annual 7 percent to 8 percent average GDP growth rate from 2018 through 2022. With these growth rates, the economy will expand 50 percent by 2022 from its base in 2016. Likewise, per capita income is projected to increase by 40 percent from US$3,550 in 2015 to at least US$5,000 in 2022. Indeed, our economy is expected to graduate from middle-income to upper middle-income country by end-2019," he said.
Meanwhile, Pernia said the government's thrust on science and technology and innovation is embodied in the Philippine Development Plan, 2017-2022, which is anchored on the 0 to 10 Point Socioeconomic Agenda.
Chapter 14 of the PDP, which is dedicated to STI, specifically stresses that STI plays a pivotal role in economic and social progress. It is a key driver of the long-term growth of an economy.
"Admittedly, however, there are challenges in the current STI ecosystem of the country that hinder its responsiveness and adaptability to disruptive technologies," he said.
Pernia said the Philippines needs to upgrade its capability to manage disruptive technologies which can refer to wild and unexpected technological breakthroughs which seem to be trivial and of limited interest at first, yet ultimately they take over products and markets.
"While these disruptive technologies offer huge benefits to the economy, equally important are its potential dangers. A disruptive technology can either bring a windfall and/or adverse impacts to the global economy, compounded by the response of each economy and the various cross-country/multilateral cooperations," he said.
Pernia said disruptive technologies will change the way things are done, create new industries/jobs, and cause job losses such as in the case of low-skilled, repetitive jobs, assembly workers as well as jobs in the IT-BPM voice sector, banks, advertising, and research and development.
"The rate at which these technologies are being developed/adopted in many countries is very fast. In contrast, the country has not yet fully developed its own capabilities to produce/adopt these technologies. This constrains the country’s ability to utilize disruptive technologies to increase economic growth potential," he said.
Pernia said the Philippines needs to develop its capabilities to harness the power of these technologies.
14 April 2018