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PH economy makes 10-notch leap in global competitiveness

While the United States stepped back two notches in the 2012-2013 Global Competitiveness Report of the World Economic Forum (WEF), the Philippines made a 10-notch leap—from 75th to 65th spot—switching positions with Vietnam.

This was duly recognized by the WEF saying, “the Philippines is one of the countries showing the most improvement in this year’s edition.” That’s 22 steps up the competitiveness ladder since its recorded lowest mark in 2009, the report also said.

In its report, WEF said the competitiveness rankings were based on the Global Competitiveness Index (GCI), which is characterized by twelve pillars of competitiveness: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

The Philippine economy did well on the ‘institutions’ pillar. “The Philippines makes important strides this year in improving competitiveness—albeit often from a very low base—especially with respect to its public institutions (94th, up 23 places),” WEF disclosed.

WEF specifically pointed out that corruption and red tape might go up by 11 and 18 notches respectively, landing on the 108th spot alike, but trust in Philippine politicians made a leap with 33 notches up to the 95th rank.

GCI also confirmed that the country was able to pull off 18-notch growth on ‘macroeconomic environment,’ not to mention ‘market size’ pillar at 35th noted in the WEF report. Chances are, the Philippines has fairly stabilized itself given the continuing efforts of the national government to create a better investment niche.

The WEF report, nonetheless, stressed the support of the financial sector climbing 12 places up to the 58th spot.

Earlier this year, JPMorgan Chase & Co. asserted in its forecast that bank lending is expected to grow by 20% whereas loan demands shall be met by generous assets, particularly cash, in the banking sector, as reported by the Inquirer.

JPMorgan Strategist Adrian Mowat for Emerging Markets and Asian Equity further revealed that loan demands are likely to spring from public infrastructure financing, which is expected to materialize expensive construction projects in 2012, according to an Inquirer news report. Provided that is the case, it shall give the nation a huge sigh of relief from the notable infrastructure development slowdown reflected on the competitiveness report.

National infrastructure, meanwhile, hardly recorded significant development with sea transport at 120th and air transport at 112th.

Recall that in 2011, NAIA topped the list as the worst airport in the globe, based on the survey conducted by The Guide To Sleeping In Airports. But with over ten bidders on the list to take on the NAIA Expressway Project as of August 2012, this could come as a saving grace

Business World News, in fact, reported that the Department of Public Works and Highways has already granted bid documents worth Php75,000 per set to thirteen firms.

The NAIA Expressway Project, worth over $300 million, is likely to provide easy access on NAIA Terminals 1, 2, and 3 by constructing several on ramps and off ramps along with new roads and toll plazas.

It appears that even the labor market at 103rd place has posed a negative impact on the country’s GCI performance. Philippine economy is no stranger to employment dilemma, which  has long been identified with the country, at least by the International Labour Organization (ILO).

In a study entitled “Philippine Labour Market Outcomes and Scenarios: 2000-2015,” UP School of Economics Professor Dante Canlas claimed that, “The aggregate employment outcomes are encouraging but there are disturbing findings, particularly with regard to low-income labour’s income share, declining real earnings, unequal income distribution, and large income disparities by region.” The study was authored by Canlas for an ILO Asia-Pacific Working Paper Series.

Natural disasters won’t take a back seat in slowing down national economic growth that brings no less than infrastructure degradation. WEF contended that these catastrophic events tend to divert productivity-enhancement funds, citing education and innovation among others, to finance reconstruction projects.

That might explain why health and primary education was dragged six notches down to the 98th place—the only category where the country notably slipped off in the GCI rankings.

Nevertheless, national economy seems optimistic amidst devastation brought about by the frequency of natural disasters.

That has been proven by Central Bank of the Philippines, on its May 2012 Press Release, which stated that the country managed to achieve 3.7 economic growth subsequent to the Typhoon Sendong aftermath.

Regardless of an improved standing, Philippine economy remains behind many other Asian economies, such as Singapore, Hong Kong, Taiwan, South Korea, Malaysia, Indonesia, and India, in the GCI rankings.

On the other hand, European economies, as led by Switzerland on the 1st spot, still dominated the Top Ten spots.

Just recently, Presidential Spokesperson Edwin Lacierda expressed that the government is happy on the WEF report displaying the country’s developing economy.

He gave credits to President Benigno Aquino III for this. “President Aquino’s presence in government is the number one institutional reform in this country and, hence, you see the competitiveness of our country going up,” he was quoted saying in an Inquirer news report.

Earlier, Lacierda has laid down the commitment of the Aquino administration to strive for sustainable economic development. According to him, the current administration has recently undertaken the following measures: instituting reforms on government-owned and controlled corporations (GOCC) operations; expediting Philippine Business Registration; and streamlining business process licensing machinery.