MANILA, Philippines - The Philippines is expected to become a trillion-dollar economy by 2030, driven by the information technology-business process outsourcing (IT-BPO) sector and the robust inflow of cash remittances from Filipinos abroad, a respected US-based think-tank said yesterday.
Once the region’s perennial economic laggard, the Southeast Asian country is poised to stage a major comeback to be one of the top three economies in the region by 2030, according to Rajiv Biswas, Asia-Pacific chief economist for IHS.
“The Philippine economy has undergone a remarkable transition from a pussycat into a tiger economy over the last decade,†Biswas said in a statement issued ahead of the holding of the World Economic Forum on East Asia meeting in Manila this week.
“The Philippine economy has the capacity for robust long-term economic growth of around 4.5 percent to five percent 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,†he said.
He cited the strong growth of remittances from the estimated 10 million Filipinos working overseas as well as the local business process outsourcing industry, which has surged in the past decade.
But Biswas also warned that in order to sustain economic growth, the Philippines will have to improve conditions to attract more investment to the key tourism and manufacturing sectors.
He warned that the country still ranked very poorly on the World Bank’s ratings for ease of doing business.
He also cited government figures showing that despite the rapid growth, one in four Filipinos still lives in poverty while unemployment and underemployment remain serious problems.
The economy grew by a strong 7.2 percent last year, sustaining the 6.8-percent expansion in 2012.
Biswas said export revenues from the IT-BPO sector amounted to $13.3 billion in 2013, while remittances from overseas Filipinos climbed to $25 billion in 2013.
The stable inflow of remittances support domestic consumption, which makes up the bulk of the country’s gross domestic product (GDP), and is also a source of strength for the 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 centers,†Biswas said.
However, he said economic reforms should be put in place to further improve the business climate in the country and attract more investments in the manufacturing sector.
“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,†Biswas said.
“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,†he added.