A GROWING workforce and declining dependency ratios could translate into favorable economic growth if the country capitalizes on the demographic transition, banking giant HSBC said.
“We believe the Philippines is destined for a bright future ahead,” HSBC economist Trinh Nguyen said at the HSBC Premier Forum late Tuesday in Makati.
Characterizing the transition as a “demographic sweet spot,” HSBC economist Trinh Nguyen said the Philippine population is gradually changing from one that has high fertility and high mortality rates to one of low fertility and low mortality.
As a result, Nguyen said, the demographic profile of the country will shift from having a lot of dependents to having more workers and fewer dependents.
Nguyen noted that the past two years have already shown positive progress in the Philippine economy, adding that the country’s trend rate of economic growth (the average sustainable growth rate over an extended number of years without inflationary pressures) has increased from 5 percent to 5.5 percent.
The Philippine economy grew by 7.2 percent in 2013, compared with 6.6 percent in 2012 and 3.7 percent in 2011.
Expanding consumer market
To sustain this growth, however, the HSBC economist urged the country to maximize the benefits of the demographic transition by being mindful of a growing consumer market.
“If the demographic transition is capitalized, the Philippines will be one of the brightest stars in Asia,” Nguyen pointed out.
“What the Philippines has is rising demand. By 2050, the country’s population is projected to reach 150 million,” she added. As a result of this transition, the majority of the population will become consumers, making the attraction of consumption-oriented firms into the country important to maintaining economic growth.
Nguyen noted that early signs of interest on the supply-side are already apparent.
“We are seeing [the entry of]FDIs into the Philippines as more consumption-oriented firms are trying to look into the country,” she said.