‘We just have to find new trade markets’ — DEPDev
The Department of Economy, Planning, and Development (DEPDev) said the government intends to maintain its 6 percent to 8 percent growth assumption over the medium term despite missing the economic target set for the first quarter of 2025.
“My sense is that it’s too early to give up the 6 to 8 percent for the medium term, meaning 2025-2028,” DEPDev Secretary Arsenio Balisacan told reporters.
“I’m always an optimist and I was like that even during the Aquino administration. When everybody was so pessimistic, I was very optimistic. And what happened? We had an average growth of 6.3 percent a year for six years during that time,” Balisacan said.
The Development Budget Coordination Committee has set the 6 to 8 percent growth assumption for 2025 to 2028.
However, the government reported the economy grew 5.4 percent in the first quarter, compared with 5.9 percent a year earlier, and 0.4 percentage points below the lower end of the government’s full-year growth assumption.
Asked if the medium-term assumption could still be tweaked by lowering the range, Balisacan said it could have implications on the budget assumption.
Budget and GDP
Specific items in the national budget, Balisacan explains, have particular amounts based on the value of goods and services the economy can produce. These assumptions must be submitted to the Congress for their approval.
The amounts assigned to the budget items
should match the expected amounts the economy would produce, he said.
Any adjustment in the economic numbers would have an impact on the budget, Balisacan added.
Despite falling below the target range, the gross domestic product (GDP) in the first quarter was quite impressive, Balisacan said, since the economy was able to hurdle the harsh external environment and the domestic challenges.
It was a slowdown compared with the year-earlier GDP, “but all the other countries experienced the same thing,” he said.
“What reduced growth was the very sharp increase in the trade deficit,” he said, adding that the deficit widened by nearly 20 percent.
The net export had a negative impact on the economy, considering its shares to the GDP is as much as 11 percent, Balisacan said.
“So it easily chipped away 2.1 percentage points of the growth. If exports and imports have grown in tandem, then the GDP growth could have been 6.2 percent,” he added.
‘Doable’ performance goal
This means that the 6 percent to 8 percent growth range is “doable.” Balisacan said.
“We just have to work on those critical issues. We clearly have to work harder to make our exports more competitive to find new markets,” he added.
One of the solutions the DEPDev secretary sees is for the country to pursue regional groups, including free trade agreements with as many countries as possible.
“Not just one or two or three, which is what has been happening, but with many,” he said.
The goal of this pursuit is to diversify Philippine exports and markets ,so that the country does not fall prey to the economic shocks coming from another market.
“The world can change quickly. All these things can take long, all this uncertainty, but other countries remain optimistic,” Balisacan said.
He cited how Vietnam is now working toward a target of 8 percent to 10 percent growth.
“They want to grow double-digit so they can become an advanced country by mid-century. Can you imagine? Why can’t we be as ambitious as they are?” Balisacan added.
No capacity
But even with a big market opening for the Philippines, there is limited capacity in the country, especially car manufacturing.
For example, if Thailand has no access to the big markets for cars, can the Philippines take over?
“No,” Balisacan said, because you don’t have those investments here.”
In agriculture, the country does not have the capacity to compete with its neighbors for big markets,” Balisacan noted. “You have low productivity here. Can you take over what Thailand, Vietnam and Cambodia are exporting?”
“Because again, we haven’t invested enough to expand capacities here and improve productivity,” he added,
“You need to address those, whether or not you’re facing these problems because it benefits us in the longer term,” Balisacan said.
