MANILA, Philippines - The Philippines and other ASEAN countries should increase infrastructure investment in a bid to spur potential growth amidst a global economic slowdown, according to a senior official of the International Monetary Fund (IMF).
Dr. Anoop Singh, director of the IMF’s Asia and Pacific Department, said while economic growth in Asia is projected at a solid rate in 2012, downside risks from a weakening global economy have greatly intensified.
Singh said the persistent weakness in advanced economies underscores the importance of shifting the growth model in Asia.
“This means advancing the policies needed for rebalancing and maintaining flexible exchange rates. This would help shift the engines for growth toward domestic demand and make growth more inclusive,” he said during the recent IMF Regional Economic Outlook (REO) for Asia and Pacific held here.
Singh said the rebalancing in ASEAN involves more infrastructure spending that would crowd in private investment and increase economic growth.
He said rebalancing is imperative in making growth more inclusive.
Dr. Vivek Arora, IMF assistant director of the Asia and Pacific Department, meanwhile said that while Asia has achieved rapid economic growth in recent decades, the region is still home to the largest number of the world’s poor.
“Inequality has increased across Asia more than in most other regions,” he said. “The gap between the richest and poorest has widened in the Philippines as well.”
Arora said the rise in inequality is dampening the impact of growth on poverty reduction. As a result, growth is less inclusive than it could be.
The Philippine Development Plan (PDP) already listed infrastructure investment among the key measures for inclusive growth. Others are governance reform, investment in education and health, and supporting the poor.