The Philippines now aims to become a high-income economy by 2045 at the latest, Socioeconomic Planning Secretary Arsenio M. Balisacan said.
“Assuming that the economy can regain its growth trajectory in the next decade, also the trajectory targeted for the medium term of this administration, and hold on to it for two more decades, the Philippine economy can become a high-income economy by the first half of the 2040s,” Mr. Balisacan said on Thursday during the European Chamber of Commerce of the Philippines luncheon meeting.
Mr. Balisacan told reporters after the event that the timeline for achieving high-income economy status was pushed back to 2045, from 2040 previously, reflecting the impact of economic scarring from the pandemic.
The Philippine economy contracted by a record 9.6% in 2020, as the government implemented strict lockdowns to curb the spread of the coronavirus disease 2019 (COVID-19).
“The aspirations [of Ambisyon 2040] remain the same. It’s just the timeline that might have to be realistically revisited. There was a very sharp contraction in 2020 that really dragged down the average growth for the Duterte administration substantially. If only we could have maintained at least 6%, it could have been doable,” Mr. Balisacan said.
The country’s gross domestic product (GDP) expanded by 5.7% in 2021, and by 7.8% in the first half of 2022. The government targets 6.5-7.5% growth this year, and 6.5-8% annual growth for next year until 2028.
Mr. Balisacan reiterated that the Philippines is still expected to reach upper middle-income status by 2024.
According to the World Bank, the Philippines remained a lower middle-income economy despite a 6.12% increase in its gross national income (GNI) per capita to $3,640 last year.
The World Bank increased its income range for the upper middle-income bracket to a GNI per capita of $4,256-$13,205 this year, from $4,096-$12,695 in 2021.
The National Economic and Development Authority (NEDA) chief acknowledged the threat of elevated inflation in the medium term but is confident of the economy’s resilience.
“While inflation is a key policy challenge in the near term, the Philippine economy shows resilience… the priorities for the medium term, 2023 to 2028, [remains to be] reinvigorating job creation, rapid poverty reduction, and hastening economic transformation. All while adhering to prudent macroeconomic management,” Mr. Balisacan said.
Inflation quickened to 6.4% in July, the fourth consecutive month it exceeded the Bangko Sentral ng Pilipinas’ 2-4% target.
For the first seven months, inflation averaged 4.7%, mainly due to soaring prices of food and higher transport costs.
Meanwhile, Mr. Balisacan said newly enacted economic reforms will help improve the country’s business climate and attract more investments.
Specifically, he cited the amended Retail Trade Liberalization Act, the Foreign Investment Act, and the Public Service Act as “game-changing reforms” that signal the country’s openness to public-private partnerships (PPPs) and foreign investment.
“I still think that the way for us to move is not to close our doors. But obviously there are sectors that we’ll need to be quite sensitive about because they are politically sensitive sectors,” he said.
He also signaled the NEDA’s intention to review the implementing rules and regulations (IRR) of the Build-Operate-Transfer law which is viewed negatively by economists and the private sector as it compels private proponents to shoulder more risk while relieving the government of responsibility for delayed deliverables.
“The review aims to address the private sector’s concerns about the viability of PPPs while upholding the government’s objective[s],” Mr. Balisacan said.
“We are mindful of how investor decisions rely on the predictability of such regulations when envisioning their long-term plans that will require a significant amount of resources,” he added.