ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Investments in infra key to Philippines' growth
Publication Date : 09-10-2013
The Philippines may be enjoying the limelight as Asia’s growth leader for now, but its time in the sun may come to an abrupt end if investments in world-class infrastructure, which ensures long-term gains, are not made soon.
Bank of the Philippine Islands (BPI), in a report released this week, questioned the sustainability of the country’s ability to maintain its status as the current investment darling among the world’s emerging markets.
“The Philippines, with its blistering growth, is seen to dominate the opening rounds but its apparent lack of world-class infrastructure, coupled with the snail-paced improvements in capacity building may hamper its long-term prospects,” BPI’s lead economist Emilio Neri Jr. said in the bank’s monthly economics and financial research report.
“Despite recent fame, growth remains heavily dependent on consumption and investment linked-to-consumption, while being predominantly in the services sector,” Neri said.
According to Neri, the Philippines is still behind even regional laggard Indonesia in terms of cementing reforms that are needed to sustain the country’s economic pace.
“The Philippines has seen robust growth on the back of consumption, but gross domestic capital formation is still one of the lowest in the region, and is one-dimensional as it remains largely in the usual suspects of real estate and malls,” Neri said.