Brisk manufacturing activity and a strong services sector will support the robust pace of economic growth in the Philippines in the coming years, Standard Chartered Banks said.
A StanChart research report said the country has made significant inroads into developing services, manufacturing and the construction sectors over recent years.
“Comparing growth between the two periods 2001 to 2010 and 2011 to 2013, business and financial services increased their contributions to GDP [gross domestic product]growth by 3.5 ppt [percentage points]and 1.4 ppt, respectively. Manufacturing has also become more dominant, accounting for 24.6 percent of growth, from 18.5 percent the previous decade,” it said.
Improvement in these components of the economy has provided the country with broad-based support in the past few years, it said, adding that it is expecting the trend to continue in the years ahead.
StanChart believes that services-led economic growth remains a positive factor for the country.
The services sector accounted for 57.7 percent of the total GDP and 53.4 percent of total employment in 2013 it said.
The report noted the development over recent years of financial and business services—in particular business process outsourcing/knowledge process outsourcing (BPO/KPO)—and tourism in the country.
“Given that the rising middle-income group in Asia—including the Philippines—is likely to experience strong growth over the next few years, we think these sectors have the potential to grow further,” it said.
The bank also said that a less volatile services sector could partially account for the Philippines’ resilient growth story over the past few years, despite increased volatility across global and regional economies.
Meanwhile, the bank is also seeing strong potential for the manufacturing sector in the coming years, as it proved relatively buoyant in 2013, posting growth of 10.5 percent, up sharply from 5.4 percent in 2012.
StanChart also cited a briefing statement from Trade and Industry Secretary Gregory Domingo saying that manufacturing was supported by other sectors such as parts suppliers and a range of related regional supply chains.
“The Director General of the Philippine Economic Zone Authority [Lilia B.] De Lima said at the same briefing that many manufacturing companies have announced plans to expand or open new plants in the Philippines in 2014 that are likely to boost the electronics sector in the years to come,” StanChart said.
“This will help support technology-intensive production in the years ahead, although moving to higher value-added types of production would require higher levels of education and skills,” the report added.