Steering the Economy amidst Global Uncertainties and New Developments

The Philippine economy has exemplified a remarkable performance despite uncertainties both in the domestic and global markets in the past years. Its growth outlook is expected to remain strong and robust, but significant internal and external risks and challenges lie ahead. Geopolitical tensions (e.g. West Philippines Sea dispute, a pending global trade war, rising protectionism), increasing oil prices followed by rising inflation rates, and the evolving landscape of the labor marketplace (i.e. rise of disruptive technologies) pose serious threats to the country's current growth trajectory. In the near-term, domestic demand will continue to be one of the major contributors to growth and thus main economic policy actions should focus on removing various barriers to investments, upholding competition, reducing regulatory burdens, expanding fiscal space to finance infrastructure and wider social protection coverage, and ensuring more efficient public sector spending. In the face of the threat of a trade war and of protectionist policies in major trading partners, serious efforts to pursue reforms that will hasten structural transformation and modernization of the economy must be executed. Finally, policymakers have to step up and formulate appropriate policy measures to enable the economy to be productively engaged with the new digital economy in the cusp of the Fourth Industrial Revolution.