The Philippine economy may grow at a faster pace than China in the coming years because of its strong fundamentals, according to Standard Chartered Bank.
In an economic briefing, Marios Maratheftis, global head for the Macro Research of Standard Chartered Bank, said that the bank has been quite positive for the Philippines as it projected a 6.9-percent growth for the country this year before settling to 7 percent in 2015.
“We still are very positive for the Philippines. It’s a positive story. Within the next three, four years there is no reason why the Philippines cannot start growing significantly faster than China for example,” he said.
Maratheftis added that there is no reason why from 2015 onward, the Philippines cannot be growing at 8 percent plus.
He cited leveraging in the Philippines as one of the factors of the positive outlook.
“The levels of debt are very low, so it’s leveraged compared to the rest of the region and compared to the rest of the countries,” he said.
Maratheftis added that the country’s gross domestic product is growing much faster than credit, which he said is a healthy sign.
“It also shows that for the Philippines businesses and households . . . they can create much more economic activities than other countries can,” he stated.
Furthermore, Maratheftis said that the Philippines also emerged as the most exposed and most sensitive country in terms of the development in the United States (US).
“The Philippines is the country which is most exposed to the developments in the US. So when it comes to the Philippines, developments in the US are far more important to the economy than in China,” he said.
Maratheftis added that the exposure of the country to the US economy can be considered good news given that the biggest economy in the world is expected to grow from 1.6 percent to 2.7 percent next year, while China is expected to decelerate next year.
On the other hand, Maratheftis said that one of the downsides of the Philippine economy is lagging foreign direct investments (FDIs).
However, he said that the government’s private-public partnership programs, and the country’s investment grade status from the three rating agencies can be the drivers for FDIs.
“Wherein there is a lot of room for the Philippines to catch up and within that the positive growth story, the private-public partnership model that the government is introducing, which is already a success, and the fact that the country has already been upgraded by the credit-rating agencies are significant drivers of foreign direct investments,” he said.