Mid-Term Election To Boost Economy

30 January 2013

MANILA, Philippines --- The mid-term election this May will "boost" the domestic economy against the backdrop of pocketful of challenges the country is facing that could impinge on its growth potential.

Economics professor and former Budget and Management Secretary Benjamin E. Diokno, in the EONSphere CEO (Chief Executive Officer) roundtable discussion held recently, said that the national elections could further enhance the positive prospects of the economy as measured by the gross domestic product (GDP).

The economic managers have forecasted GDP to sustain its growth momentum for the year to between 6.0 and 7.0 percent for this year from the estimated 5.0-6.0 percent growth expectation for 2012.

On Tuesday, President Benigno S. Aquino III, though, believed that the economy in the past year posted an even higher growth ahead of today's announcement by the National Economic Development Authority (NEDA).

Diokno justified his assessment, citing the impact of the past three elections. "At least during the last three previous elections, the economy got extra boost," he said while refusing to quantify the extent of the election stimulus.

He, however, cautioned the Aquino administration against "complacency," saying that there are still several policy reform measures that have to be undertaken and issues and challenges to be addressed to foster GDP growth, among them increase budgetary allocation for infrastructure projects and amendments to some of the restrictive provisions in the Philippine Constitution.

"The government should allocate at least five percent of GDP (around P500 billion) for public infrastructure every year in order to make up for past neglect, and in order to sustain the planned growth of 7-8 percent GDP (in 2015)," Diokno said, adding that for now the government is spending "less than two percent of GDP."

Other challenges that could slow down the country's growth momentum include the slow recovery of industrialized countries, which could take its toll on the country's export performance and could, in turn, narrow the demand for overseas Filipino workers (OFWs), and the sharp peso appreciation versus the US dollar.