The Philippines needs to diversify its economy beyond consumption and services to strengthen its resilience, according to National Economic and Development Authority Secretary Arsenio Balisacan.
Speaking at the Temasek Distinguished Speaker Lecture at the Lee Kuan Yew School of Public Policy at the National University of Singapore on Feb. 11, Balisacan outlined how the Philippines could build on its strong economic momentum of the last two decades by further strengthening economic resilience.
As the Philippines navigates tensions and uncertainties from global megatrends, it should maintain sound economic fundamentals while embracing coordination and cooperation to respond to economic shocks, he said.
Balisacan said the government should create an attractive investment climate, aggressively increase the country’s presence in regional and global markets to strengthen the external sector, and enact structural reforms to improve markets for critical sectors.
The government should also enable the adoption of cutting-edge technologies and foster innovation to sustain productivity growth. To leverage these technologies, the Philippines will need to invest significantly in its human capital, he said, adding that this is also expected to boost economic growth as the country seeks to reap the benefits of its demographic dividend.
“Fortunately, the Philippines is well-positioned to leverage its dense migrant networks to support capacity building and technology infusion, especially in this age of digital connectedness,” Balisacan said.
“More importantly, this calls for policies addressing emigration and encouraging talent to return, such as sufficient funding for research and strengthening academe-industry linkages,” he said.
He also underscored the need to strengthen partnerships with traditional allies, like-minded nations and ASEAN middle powers, focusing on trade, investment and development cooperation amid the unfolding trade war and climate crisis.
A favorable environment for global trade and investment will be key to the country’s drive toward greater economic diversification, high-quality job creation and accelerated poverty reduction, he said.
“Partnership at the regional and international levels, especially among smaller, open economies caught in the rivalry between economic giants, is more crucial now than ever,” he said.
Balisacan highlighted key megatrends shaping regional and global development. These include rising inequality, growing protectionism, increasing use of industrial policy to promote disruptive technologies, and a costly energy transition amid worsening climate change.
These megatrends are affecting the policy environment for open trade and investment, which have been pivotal to the region’s socioeconomic transformation in the past half-century. This will have consequences for the development trajectories of Asia’s emerging economies, including the Philippines.
“Asia’s low- and middle-income countries face a range of megatrends that shape and constrain — or, viewed positively, enable and facilitate — their development strategies,” Balisacan said.
“Yet these same megatrends can also open up new avenues for growth if acted upon strategically, employing both reactive measures to meet immediate challenges and forward-looking policies to anticipate emerging opportunities,” he said.
