Economist says population is growth driver

MANILA, Philippines - A huge population should not be viewed as a liability but as an asset as this will translate to a greater domestic market that could make up for the weakening of exports brought about by the global financial crisis, University of Asia and the Pacific economist Bernardo M. Villegas said Tuesday. "Population is a tremendous asset. A bigger the domestic market, the greater you are insulated from the global market," he said during the Philippine Life Insurance Association membership meeting in Makati City. "Be sure not to be dependent on exports. You have to cultivate the domestic market. Those with internal market will survive the tsunami," he added. The population of the Philippines is roughly 90 million while its annual population growth rate is 2.04%, one of the highest in Asia. Civil society organizations and women’s groups have asked the government to provide the poor access to artificial birth control methods like condoms and pills. The government last month reported that merchandise exports dropped by 11.9% to $3.49 billion last November from P3.965 billion in November 2007 due to a weaker demand. Electronic products, the country’s main export commodity, fell by 17% in November to $2.02 billion. While concerns have been raised about the adequacy of food supply due to a growing population, Mr. Villegas said the government should instead come up with ways to boost agriculture so it can help spur economic growth. "The challenge is how to give importance to agriculture so it can contribute more to GDP [gross domestic product] growth." Mr. Villegas said the world economy will be vulnerable to the financial meltdown in the US, high rates of inflation, higher interest rates, high but moderating food and fuel prices, slowdown in Europe and Japan, as well as fiscal and trade deficits in the US. He said the Philippine economy is threatened by slowdown in consumer spending and exports, high but slowing inflation rate, higher government deficit, higher trade deficit and depreciating peso. But Mr. Villegas said the local economy can still grow by 3.8 to 4.5% this year due to continued overseas Filipino workers (OFW) remittances, continuous influx of East Asian tourists, expansion in mining and energy investments, pump priming in infrastructure spending, expansion in low- and medium-costs housing and office buildings, increase in demand for business process outsourcing services, and opportunities in medical tourism and retirement villages. His forecast is well within the government’s economic growth forecast of 3.7% to 4.7%. "Majority of our OFWs are in services that are demand inelastic. For instance, even if the economy is down, Europeans will still need caregivers," he said. — Alexis Douglas B. Romero, BusinessWorld