A rapidly growing domestic market and the revival of the country’s manufacturing industry will help fuel gross domestic product (GDP) growth of 7.0 percent to 9.0 percent in the next five to 10 years, economist Dr. Bernardo Villegas, chairman of the Center for Research and Communications, said on Tuesday.
“The tipping point of the Philippines was reached after more than 25 years of very painful and slow reforms in politics, in governance, in the central bank and other institutions,” he said during the Asia Finance Summit held at the Raffles and Fairmont Makati.
These positive trends, he said, are the result of the combined effects of a stable democracy, improving governance, strong macroeconomic fundamentals, labor peace, and the existence of a pool of educated, young and English-speaking workers. The renaissance of the manufacturing industry and a stellar stock market, one of the best performing in the world, are important factors as well, he added.
Villegas also noted that the country enjoys a high rate of savings because of the robust remittances from overseas Filipino workers (OFWs), a large contributor to Philippine GDP.
Personal remittances from OFWs registered a record high of $2.4 billion last December, resulting in remittances of $25.1 billion for the full year of 2013.
Philippine GDP grew by 7.2 percent in 2013, compared to 6.8 the previous year, according to government statistics.
The Hong Kong and Shanghai Bank, in a recent analysis, said the Philippines stands out as one of Asia’s strongest economic performers because of its strong macroeconomic fundamentals but warned that monetary authorities must keep an eye on the rising inflation.
Villegas also noted the low rate of dependence on petroleum as a positive trend given that the presence of a variety of alternative energy resources in the country such as geothermal, biomass and hydrogas.
The Philippines, he said, is strategically located to benefit from the planned integration of the Association of Southeast Asian Nations into an Asean Economic Community (AEC).
He said that the economic integration will be an advantage to the Philippines because it will allow the country to go head-to-head with economic giants China and India.
“The Philippines is very much in the niche of this development,” he said.
However, Villegas noted that the Philippines should encourage more foreign direct investments (FDI) to cement the benefits of integration, noting that economic provisions about the entry of foreign investments in the Constitution must be reviewed.
“Filipinos should watch very closely how we can increase the flow foreign direct investments,” he said.
Net FDI inflows reached P3.6 billion in the first 11 months of 2013, up by 36.6 percent from a year ago level.