PHILIPPINE ECONOMIC PROFILE
Source: The Embassy of the Kingdom of the Netherlands in the Philippines
The Philippine economy withstood the global economic downturn better than any other ASEAN country. Besides being limitedly affected by the plagued international securities, the Philippines enjoyed buoyant domestic consumption, low dependence on exports and large amounts of remittances flowing into the country from the millions of Filipinos working abroad, further cushioning the impact of the world-wide economic crisis. With a current account balance surplus, a stable banking system, a well performing stock market, a constantly expanding business outsourcing industry and record-high levels of international reserves, prospects for the Philippine economy are good. HSBC has even projected that the Philippines will become the 16th largest economy in the world by 2050 — larger than neighboring Indonesia, Malaysia, Thailand or even oil-producing Saudi Arabia or the Netherlands.
The country’s sound macroeconomic fundamentals are perceived to be strong and the Philippine Government is making significant efforts to improve the business environment in order to increase the country’s competitiveness and its ability to attract foreign investments. In fact, the Geneva-based World Economic Forum noted that the Philippines global competitiveness rank improved its position from 75th five years ago to 47th in 2015.
A persistent matter of concern is the inequitable distribution of wealth and the low level of social economic development of large parts of the population. Furthermore, the regularity of natural devastations as a result of a combination of natural disasters and ulnerable natural environment is another matter of concern.
Source: Asian Development Bank
The Philippines is among the fastest growing economies in Southeast Asia with upgrades to sovereign investment ratings confirming the improvements in the country’s macroeconomic fundamentals.
The Philippine economy will bounce back in 2016 on a pickup in government spending and a likely bounce back in exports, says a new Asian Development Bank (ADB) report.
ADB, in an update of its flagship annual economic publication, Asian Development Outlook 2015, projected that for 2016, growth will rebound to 6.3%.
The pickup in government spending that began in the second quarter of 2015 should accelerate, helped by better budget execution and progress on the pipeline of public-private partnership projects. Election spending ahead of May 2016 and an expanded government budget will also underpin growth.
Private investment and household consumption should continue to grow with employment and remittances remaining robust and oil prices low, while services will remain the main growth driver led by robust business process outsourcing, tourism and retailing. Exports are likely to improve in 2016 in line with better performing industrial economies. Inflation, which has been below forecast as oil and food prices remain benign, is likely to edge up to 3% in 2016 with oil and other commodity prices seen rising.
The main risks to the outlook are slower than expected economic growth in the major industrial economies and the PRC, and a severe El Niño which would hurt rural incomes and also impact food, water and electricity prices.