The World Bank (WB) is pushing the Philippines toward implementing continued structural reforms to foster its inclusive growth agenda, including those that enhance market competition, encourage investments, and improve labor market condition.
Latest WB East Asia and Pacific Economic Update April 2019 said key initiatives include revisiting foreign participation limits in the domestic market, and enhanced efforts to improve doing business in the country.
The report pointed out that supporting policies in the labor market includes training, job-search programs and measures to support workers affected by the sectoral shifts of employment.
“Sustained investment in human capital development specially in health and education, and in sectors that create quality employment are needed to support inclusive growth,” it said.
The WB underscored external and domestic risks to the country’s economic growth.
The report said key domestic risks come from the delayed implementation of the public infrastructure investment projects, partly caused by delayed 2019 budget approval, and policy uncertainty over tax reform programs that could prolong weakened investor confidence.
“In the medium term, the government’s expansionary fiscal strategy could lead to fiscal sustainability challenges if not accompanied by revenue increases. Still, strong macroeconomic fundamentals are in place to buffer against shocks,” it added.
The WB said key external risks come from heightened uncertainty generated by the trade dispute between the United States (US) and China, the ongoing policy normalization in advanced economies, and tighter global financing conditions.
Growth in developing East Asia and the Pacific (EAP) is projected to soften to 6.0 percent in 2019 and 2020, down from 6.3 percent in 2018, largely reflecting global headwinds and a continued gradual policy-guided slowdown in China.