The Philippine economy will expand at an average of 6.5 to 7 percent over the next decade, according to a report by London-based consultancy firm Capital Economics.
In the latest report on Emerging Asia Economics Weekly, Capital Economics said the reduced risk of an external crisis, an improvement in the fiscal position, healthy demographics, a reform-minded government, and a developing manufacturing sector contribute to an optimistic outlook for the Philippines.
“The Philippines has run a current account surplus in every year since 2003, while foreign exchange reserves have increased five-fold over that period. The large current account surplus, and the resulting lack of dependence on foreign financing, limits the country’s vulnerability to sudden capital outflows,” it said.
It also noted the government debt to GDP ratio has fallen to less than 40 percent in the past decade against a high of around 70 percent in 2003.
Capital Economics said that means the chances of a sovereign debt crisis are greatly reduced and the government has more money to use for infrastructure, education, and healthcare instead of servicing debt.
It added a United Nations projection that the country’s population of working age is expected to rise by over 40 percent from 2010 to 2030 will mean a potential boost in productivity as long as jobs can be provided.
Meanwhile, a crackdown on corruption and other reform initiatives “have boosted the Philippines’ rankings on a range of league tables by groups such as the World Economic Forum and the Heritage Foundation, which measures the quality of a country’s business environment and the progress being made on reform.”
It said the next administration will be able to build on the gains of the current administration if it continues reforms. “However, there are clearly no guarantees this will be the case,” it said.
It added “a weak, incompetent or corrupt leader” might fail to take advantage of the gains, or even reverse them.
The report also said the Philippines has helped nurture a competitive manufacturing sector, with manufacturing output in the country growing faster than in the region as a whole.— JDS, GMA News