Philippines economy to more than double over next decade, says IHS research.
According to the World Bank, Philippines has been among the emerging markets in the region given its sound economic fundamentals and highly-skilled workforce.
The economy of the Philippines is the 4th largest economy in South East Asia and the 35th largest economy in the world by purchasing power parity according to the World Bank in 2009.
Rajiv Biswas, Asia-Pacific Chief Economist for IHS, has come out with some extensive research on the country ahead of the World Economic Forum (WEF) in Manila. Below are the excerpts of the report.
- Size of Philippines economy to more than double in next ten years
- Philippines projected to become a trillion dollar economy and one ASEAN’s top three economies by 2030
- Philippines economy has undergone a remarkable transition from a pussycat into a tiger economy over the last decade
- Economy forecast to grow at 6.2% in 2014 and 6.0% in 2015
The Philippines economy has the capacity for robust long-term economic growth of around 4.5 per cent to 5.0 per cent per year over the 2016 to 2030 time horizon. This will transform the Philippines economy from its current $280 billion economy to a $680 billion economy by 2024, with a projected GDP of $1.2 trillion by 2030.
IHS forecasts that total GDP per person in the Philippines will rise from around $2,800 in 2014 to around $5,800 by 2024. This has considerable implications for the size of the Philippines consumer economy. These significant increases in per capita GDP will create one of ASEAN’s largest consumer markets of the future, as the middle class rapidly expands over time.
Remittances and IT outsourcing are economic growth drivers
Two important growth drivers for the Philippines economy are the rapidly growing information technology-business process outsourcing (IT-BPO) sector and the strong flow of remittances from Filipino workers abroad. The export revenue from the IT-BPO sector has more than doubled between 2008 and 2013, reaching an estimated $13.3 billion. Meanwhile remittances from Filipino workers abroad rose to $25 billion in 2013, providing a key source of strength for the Philippines balance of payments.
The rapid growth of the IT and BPO industry is also creating positive transmission effects for the rest of the economy, including rapid growth in demand for commercial floor space, underpinning the development of existing and new office parks in urban centres.
More competitive manufacturing sector key to future growth
While the current growth drivers of the Philippines are the IT-BPO industry and the strong and stable remittances of the overseas Filipino workers, the long-term outlook for the future development of the Philippines will be heavily dependent on the ability to make the manufacturing sector more competitive and to mobilize both foreign and domestic investment flows into the manufacturing sector. This will require considerable improvement of the business climate, with the Philippines still ranked very low globally on the World Bank’s Ease of Doing Business rankings.
From pussycat to tiger economy
The Philippines continues to face other economic development challenges. Poverty and unemployment remain very high in the Philippines, with around 28 per cent of the population still living in poverty according to government estimates, while the total number of unemployed or underemployed workers exceeds ten million. Large numbers of new workers are also entering the workforce each year, with around 1.1 million new workers expected to join the labour force each year between 2014 and 2016.
The Philippines economy has undergone a remarkable transition from a pussycat into a tiger economy over the last decade. However, sustained rapid growth will require continued economic reforms to improve the business climate of the Philippines, making it more attractive for foreign direct investment into sectors such as manufacturing and tourism.