The Philippines has overcome a number of major challenges over the past three decades and whoever wins the 2016 presidential elections will inherit a much leaner economy, global banking institution HSBC said.
In a research note, HSBC economist Thrinh Nguyen said the Philippines is one of the bright stars emerging from Asia, citing the country’s reduced public debt burden due to greater revenue generation, more disciplined government spending, stable macroeconomic growth and higher aggregate investment in the economy as major achievements of the current Administration.
“The Philippines, thus, has overcome a substantial [amount of]challenges in the past three decades,” she said.
Nguyen described the economy as having turned around from one that was saddled with debt and stagflation to that which now enjoys steady growth and low debt, both at the public and household levels.
“Whoever wins the upcoming 2016 presidential election will inherit a much leaner economic machine: one that has weaned itself off high interest expenses and has accumulated savings and lowered the dependency ratio,” she said.
Nguyen noted for example that in 1990, the Philippine government disbursed more than a third of its expenditure on interest expenses, reflecting the high amount of debt incurred during the Marcos years.
“Interest payments have since declined, and we expect them to be less than 15 percent of the total fiscal expenditure by end 2016,” she said.
With a favorable demographic transition, lower debt and excess savings, the next President is likely to shift the economic focus toward greater infrastructure investment, including electricity generation and transportation networks, in order to accommodate years of rapid growth, Nguyen concluded.