Strong household consumption, foreign investments, and economic reforms will ensure the country achieves an economic growth of 6 to 7 percent annually, distinguished economist Dr. Bernardo Villegas said.

“We are on a solid footing to grow by 6 to 7 percent every year whatever President Ferdinand Marcos Jr. does,” he said Tuesday night in an economic and real estate briefing organized by EastWest Bank and held at Solaire Resort, Quezon City.

For this year, Villegas projects the economy to grow by 6.4 percent which is higher than the 5.6 percent recorded last year by the Philippine Statistics Authority (PSA).

The forecast, however, is within the government target of 6 to 7 percent for this year.

Villegas, an economics professor at the University of Asia and the Pacific and has a doctoral degree from Harvard University, shared three factors for the “admirable” Philippine economic growth.

3 factors for momentum

He is also a visiting professor at the IESE Business School in Barcelona, Spain.

First, he said the previous and current presidents appointed brilliant leaders for their economic teams.

“This is because of painful reforms in 30 years made by some of the best and brightest people in our economic history, whatever the quality of the leadership was,” Villegas stressed.

He cited the governors of the Bangko Sentral ng Pilipinas which is responsible for steering prices of goods and services to low levels by adjusting the benchmark for interest rates of private banks. Its leaders also provide guidance on policies which can make financial services more accessible to all Filipinos.

According to the PSA, the economy expanded by 6.3 percent in the second quarter from 5.8 percent in the previous quarter as households continued to spend. Meanwhile, inflation dropped to 1.9 percent last month from a high of 8.7 percent in January 2023 after the central bank hiked its policy rate by 450 basis points.

In August, the central bank cut the rate by 25 basis points to 6.25 percent to spur more household consumption and business activities.

Meanwhile, the central bank also eased rules on deposits by allowing opening accounts with less than P100, removing minimum maintaining balance, and dormancy charges.

Its leaders also authorized the setting up of branch-lite banks and digital banks so Filipinos, especially in the provinces, can avail of basic banking such as savings, small loans, and fund transfers.

As a result, the central bank reported that Filipino adults with bank accounts increased to 56 percent last year.

“Our economic team is recognized by global institutions. The Philippine Central Bank has been rated many times as the best in Southeast Asia,” Villegas said.

Second, Villegas said sustained inflows of remittances from overseas Filipino workers at $40 billion or more each year will further strengthen household consumption amid a projected downtrend in interest and inflation rates.

“Filipinos are poor savers with a savings rate of 9 percent,” he said.

However, Villegas warned that Filipinos should increase their savings to ensure comfortable lives for themselves and their families in the future.

“In other parts of the world, the savings rate is 25 to 45 percent,” he shared.

Third, Villegas said President Ferdinand Marcos Jr. is on the right track in attracting foreign investments to the country amid the geopolitical tensions between China and the United States.

“For geopolitical reasons, the Americans and Japanese are very nervous that a lot of their factories are in China. They would like to move their factories away from China, maybe to the United States or friendly countries or the Philippines,” he said.

“I admire our President for having traveled to more than 30 countries, telling investors to come to the Philippines,” Villegas added.

He expects Marcos’ trips abroad to draw foreign investments to yield substantial economic contributions in the next five years.

To reduce the poverty rate to a single digit, Villegas said the economy should grow by 8 percent.

He advised the government to focus on boosting the production of high-value agricultural products, such as coffee and avocados, through farm clustering and farm management by corporations. 

Villegas added the government must improve its anti-malnutrition programs and carry them out effectively to ensure more Filipino high-skilled workers can seize job opportunities from local and foreign firms.