RP NEEDS 7% GROWTH TO ESCAPE POVERTY - ADB
MANILA, February 9, 2006 (MALAYA) By MAX ESTAYO - The Asian Development Bank said the Philippines needs to grow by at least seven percent to get out of the poverty trap.
ADB country director Thomas Crouch said the Philippinesí growth of five percent is very "modest" and "slow" compared with its neighbors.
The economy grew 5.1 percent in 2005, declining from 6.1 percent in 2004, pulled down by weak agricultural output and high oil prices, which slowed consumption.
This year, the government is expecting 5.7 percent but has to contend with low agricultural productivity and exports, as well as lower consumption, the main driver of economic growth.
"If the growth continues at what itís historically been in the last decade, it will not be sufficient to get the country out of the poverty trap," Crouch said, at the sidelines of the recent yearend economic briefing in Makati.
Crouch said 40 percent of the countryís populations live below poverty line subsisting on $2 per day or less.
"The government must ramp up the growth rate from what weíve seen last year, 5.1 percent, to 7 percent or more," Crouch said.
He said China and India have been growing rapidly but the Philippines is being left out of the "Asian juggernaut."
"China is growing at 10 percent and India at 7 to 9 percent. The Philippines must find ways to join that Asian juggernaut and ramp its growth by a couple of two percentage points," he said.
Crouch said the Philippines is relying on its agricultural sector yet it has done nothing to protect it from the "vagaries of nature."
"Agriculture is very vulnerable sector, itís dependent on the weather and thatís something that the government canít control. However, it can look at opportunities to protect the sector like investing more in irrigation," he said.
The ADB official said the Philippines must also enhance its connectivity with the Asian region so the country will be "more tightly locked in to the rapid growth experienced by China and India."
"That means, improving access to the Asian markets by raising the competitiveness of the Philippines as an investment destination," he said.
With the government doing a "terrific performance" in putting the fiscal situation under control, Crouch said the government must now train its sights on infrastructure development.
"Governance is also important and this includes the rule of law. It must be easier and quicker to deal with the courts. In addition, there should be no leakage in taxation and the government must manage the GOCCs well," Crouch said.
Crouch said the government must also pay attention to the "greening of the Philippines."
"It should be more aggressive in looking at opportunities to ensure that economic activities are consistent with environmental sustainability. We donít have blue skies in Metro Manila because of air pollution. Pasig River can be used for tourism but itís biologically dead," he said.
Crouch said the economy should also benefit from the revival of the mining industry, of which some $350 million new investments have been poured in 2005.
"This is a powerful resource for investment, and income and employment generation but is inconsistent with environmental sustainability. We must be vigilant in honoring environmental safeguards," Crouch said.
Chief News Editor: Sol Jose Vanzi
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