MANILA -- The Philippines is on its way to becoming an upper middle-income level economy, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said at a side event of the 51st Annual Asian Development Bank (ADB) Meeting here Thursday.
During the joint seminar of ASEAN+3 Macroeconomic Economic Research Office (AMRO) and BSP, Guinigundo said the country’s growth momentum is being driven by a robust services sector which is supported by growing industries.
Based on the categorization of the World Bank in terms of a middle income country, the central bank official mentioned that the Philippines currently belongs to low middle-income economies at USD3,594 gross national income (GNI) per capita.
In order to reach the upper middle-income level, which GNI per capita ranges from USD3,956 to USD12,235, Guinigundo said the Philippines will continue to focus on strengthening its services sector and local industries by way of improving infrastructure and human capital development.
“We’re about to get there,” said Guinigundo.
He said the government’s aggressive spending on Build, Build, Build Program will improve infrastructure and connectivity which in-turn will help various sectors become more competitive. It will also attract the private sector to get involved in infrastructure projects which will translate to more jobs for Filipinos.
The BSP deputy governor said the country’s economic growth is “going to be sustainable over the long run”, with its demographics and better quality of workforce. “Labor dynamics become more favorable. There’s a shift from informal sector to the formal sector. And a larger share of a more educated members of the labor force, more share of high school and college graduates in the labor force,” Guinigundo said.
Guinigundo noted that these developments will continue to support the services sector, which has been the key growth driver of the Philippine economy.
The Philippines was able to take advantage of the global opportunities that contributed to the success of the services sector -- the need for skilled workers, which translated to remittances from overseas Filipino workers; outsourcing of business operations, which expanded services exports growth due to business process outsourcing firms locating in the country; and tourism, which is easily activated with a lot of tourist spots in the Philippines.
“For the most part of the last 40 years, services overtook agriculture in terms of growth and share of GDP (gross domestic product), while industry was second in both growth and share of GDP,” Guinigundo said. “While services has become very important economic driver in the last 10 to 20 years, industries has been fast catching up,” he added.
He cited that in terms of share to the total GDP, services accounted for 58 percent while industries shared 33 percent.
But in terms of growth, industries already exceeded the expansion of services, the BSP official said, attributing this to the developments in infrastructure, innovation, and human capital. “So in terms of momentum, industry is now fast gaining momentum and we could expect that this will provide additional drive and support to economic growth,” Guinigundo said.
The country is hosting the 51st Annual ADB Meeting from May 2 to 6. (PNA)
