Philippines among growth leaders in Asia Pacific in 10 years

MANILA, Philippines - London-based Capital Economics Ltd. predicts the Philippines would be one of the fastest-growing economies in Asia Pacific, achieving an average six to 6.5 percent gross domestic product (GDP) growth over the next decade.

Gareth Leather, emerging markets economist at Capital Economics, said the Philippines has bucked the economic slowdown across large parts of emerging Asia over the past couple of years.

“The positive outlook for investment is one of the key reasons why we remain optimistic on the outlook for the Philippines. We think growth in the Philippines will average around six to 6.5 percent over the next decade. This would not only represent a big improvement on its performance over recent decades, but it would also make the Philippines one of the fastest growing economies in the region,” Leather said.

He pointed out the Philippines has enjoyed a major reversal of fortunes in recent years after it was labelled as the “sick man of Asia” growing an average of just over six percent since 2010.

“Not only has this made the Philippines one of the region’s fastest growing economies during this period, it has also made it one of the few countries in the region to see economic growth accelerate compared with the previous decade,” he added.

He noted that investment growth has averaged just under 10 percent since 2010 after averaging an annual average of just 3.6 percent from 2000 to 2009.

The ratio of investments to gross domestic product (GDP) in the Philippines went up to 22 percent but is still much lower compared to other countries in the region.

 “Investment plays a key role in driving economic growth. In the short term it provide a direct boost to domestic demand, but it also helps over the longer term by boosting the productive potential of the economy,” Leather said.

Leather said, the prospects for the Philippines remain bright amid the country’s low savings rate.

“The positive outlook for investment is one of the key reasons why we remain optimistic on the outlook for the Philippines,” he said.

Likewise, First Metro Investments Corp. (FMIC) as well as University of Asia and the Pacific (UA&P) expect the country’s GDP expanding faster at 6.2 percent this year from 6.1 percent last year.

The robust outlook was anchored on the higher consumption due to the May 2016 national elections as well as the improving government spending.

“With government spending getting into high gear, especially as the May 2016 elections come closer, and a little nudge from exports, we see the economy topping the Association of Southeast Asian Nations and East Asian countries’ growth, except China’s, with a projected full year GDP growth of 6.2 percent.