The growth momentum of the Philippine economy heavily relies on its government’s capability to apply twin initiatives to reform the tax system and rebuild the Philippines’ infrastructure.
GDP (Gross Domestic Product) can grow as high as 8% this year, according to Bangko Sentral Deputy Governor Diwa Guinigundo.
According to the article, Security Bank economist Angelo Taningco forecasts a 6.8-percent growth for 2018 if the implementation of the P8 trillion infrastructure rebuilding brakes.
“I think it’s not a bad number when it comes to growth momentum, it’s still a pick up compared to this year,” Taningco said. Moreover, optimism over the tax reform could help draw more investors this year.
The President of the Philippines Rodrigo Duterte signed the first package of the tax reform before the end of 2017. The tax reform package will raise taxes on fuel, cars and sugar-sweetened drinks to offset the decrease in personal income taxes. The said tax reform could increase consumer prices by 0.6 and full year inflation for this year could “approach higher the target” of 2-4%. However, according to Guinigundo, this is just transitory.
Also, an increase in construction activity could help reduce the country’s unemployment with the help of TESDA. According to him retraining the workforce is achievable due to the surplus in labor.
Since remittances and revenues from the BPO industry remained strong, there shouldn’t be any cause for concern or alarm on the pressure on the current account due to infrastructure-driven imports.
Furthermore, the Peso fell to its lowest levels in 11 years, which other analysts blamed on dollar demand driven by construction.
Lastly, according to Guinigundo, “We are growing and I think the economy can take care of itself. There are supporting factors to economic growth.”