The Philippines will be the “growth leader” of the Association of Southeast Asian Nations (Asean), which is expected to drive the world economy in the next few years, a senior economist at the University of Asia and the Pacific (U&AP) forecast.
“By itself, the Philippines’ economic strength won’t be able to drive the world economy. But the Asean can, with the Philippines as the growth leader. Asean, after all, has a population of more than 600 million, a young population, and more than $2 trillion combined [gross domestic product],” U&AP’s Victor Abola told The Manila Times in an interview.
“The Philippines’ fast growth started in 2012 and should continue until 2016. It could go faster and beyond 2016 provided we get another good president who has sound economic policies,” the U&AP economist added.
This was Abola’s reaction to a French trade insurance group’s report identifying the Philippines as one of the world’s “neo-emerging” economies, or diversified economies with GDP growth rates in excess of 4 percent.
According to Coface, these economies—Peru, the Philippines, Indonesia, Colombia and Sri Lanka—are not dependent on exporting raw material but have good financial systems that can support growth and absorb external shocks that can make them growth drivers of the world economy.
Nicholas Antonio Mapa, BPI associate economist, tends to agree, saying that the Philippines can grow by 5.5 percent to 6.5 percent in the next few years, which can be a major contribution to Asean’s growth.
“Certainly the Philippines can post strong economic growth in the range of 5.5 percent to 6.5 percent for the next few years, on the back of strong consumption expenditure, as we begin to enjoy a demographic dividend,” Mapa said.
Demographic dividend, he explained, is a phenomenon where there are more working citizens than the non-working, which can be seen in countries like China, South Korea and currently Indonesia.
Mapa said the Philippines would “enjoy” that phenomenon by 2015 as majority of the young population would start working by then, and the country can also “expect consumption to be funded by overseas Filipino workers’ remittances from abroad and from the earnings of this young working-age population.”
The BPI economist forecasts GDP growth for the first quarter of the year at from 5.6 percent to 5.7 percent as the country gets back on its feet on the ‘Yolanda’ effect, referring to reconstruction and rehabilitation efforts following last year’s super typhoon.
But certain “weak links” exist that continue to impede growth, which include slow public sector or government actions and lags in infrastructure and foreign direct investments (FDI).
“It is clear that the private sector is growing but the government is not able to keep in step. Thus, we can expect strong growth fueled by the Filipino consumer. But if we really want to see inclusive growth and one that is sustainable, we will need the government to do more to improve infrastructure and in turn entice foreign investors to come to our shores,” Mapa said.
“Currently, we have the worst infrastructure among the Asean [according to the World Economic Forum]and this is reflected in our inability to attract FDIs in the same way the real tigers in Asean do,” he added.