Why Now is the Best Time to Invest in the Philippines
Written by Radka Okruhlanska
Last Monday, the 8th of May, I had a chance to attend the Philippine Economic Update organized by the American Chamber of Commerce (AmCham). The featured speaker was Birgit Hansl, Lead Economist and Program Leader for the Philippines, East Asia and the Pacific region of the World Bank.
The World Bank Group works in the area of development. They provide a wide range of financial products and technical assistance to help countries end poverty, boost shared prosperity, and create sustainable economic growth. Every year they do economic analysis and forecasts. In April 2017, they issued the Philippine Economic Update: Advancing the Investment Agenda, which is free to download from their webpage.
During the session, Birgit Hansl spoke about the economic growth in 2016, as well as optimistic growth outlook over the coming years. The forecasts predict that the Philippines is likely to grow close to 7% in the next 2 to 3 years, and will remain a top performer in the Southeast Asia and Pacific region.
In 2016, the Philippine economy was resilient to global headwinds, despite slower global recovery, and the growth rate in the country reached 6.8 % thanks to robust domestic demand and investment growth. On the other hand, slower demand for the Philippines’s main exports showed weakness in trade competitiveness. Opposite to most of the Southeast Asian countries, Philippine import was much higher than export, which ranked lowest in the region.
Growth went hand in hand with unemployment and poverty reduction. Unemployment fell to a historical low of 4.7 % as 1.4 million new jobs were created. The percentage of people living under the poverty line has dropped from 25.2 % in 2012 to 21.6 % in 2015, lifting 1.8 million people out of poverty.
The World Bank predicts growth in actual GDP to reach 6.9 % in 2017 and 2018, supported by the government’s commitment to further increase public infrastructure investment. Conditions in the country present several opportunities for this development and investors should take advantage of these.
Furthermore, the Philippines has one of the highest rates of millennials entering the workforce and creating the potential for a demographic dividend, as the low number of dependents allows workers to save and invest. However, this can only happen if structural reforms facilitate savings and investment and allow skills development for young workers. Another advantage is the growing services sector that could be a catalyst for the structural economic transformation of the country.
The Philippines is projected to be one of Southeast Asia’s top growth performers in the following years. To sustain the growth pattern of recent years requires commitment to structural reforms that facilitate private investments.
Birgit Hansl provided us these interesting and useful information in relation to the economic update and forecast of the Philippines. The question is if the country can build on these advantages, and how it will adjust to future challenges such as automatization and AI.
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About the author:
Radka Okruhlanska is an AIESEC intern working as a business development associate for Staffbuilders Asia, a division of John Clements Consultants, Inc. Radka is from Slovakia and studied Finance and Tourism Management in the Czech Republic.