Nadi, Fiji―The Philippines has the “potential” to become the fastest-growing economy in Asia, propelled by an unprecedented infrastructure overhaul, tax reform, and a young workforce, the Asian Development Bank said Thursday.
A recent credit rating upgrade from S&P Global is also an indication of the “fundamental strength” of the Philippine economy, which has maintained growth above 6 percent, said ADB Chief Economist Yasuyuki Sawada.
He made his statement even as Malacañang said the Duterte administration’s economic managers had done a “splendid job” in maintaining the country’s strong economic growth and sustaining public finances.
Presidential Spokesman Salvador Panelo said the Palace was pleased with the report of Standard & Poor’s saying Manila had received a credit rating upgrade of “BBB+”
“BBB” means the Philippines has “adequate capacity to meet its financial commitments.” However, adverse economic conditions or changing circumstances could weaken the country’s capacity to meet its financial commitments.
The Philippines’ GDP growth has been among Asia’s fastest, ahead of China and Vietnam. Official first quarter GDP numbers are due out on May 9, the same day the Bangko Sentral ng Pilipinas’ policy-setting meeting.
“It’s quite possible for the Philippines to be the fastest-growing economy in Asia,” Sawada told ANC. Debt is “well under control” and overall fundamentals are “quite strong,” he said.
The Philippines’ work pool is also English-proficient and among the youngest in the region, with an average age of 28. Sawada said this would serve the needs of technology and business process outsourcing companies.
But the trade war between the US and China poses the “highest risk” to economic growth in Asia.
Should growth in China slow down because of the trade dispute, it could adversely impact the region indirectly, Sawada said on the sidelines of the ADB Annual Meeting here.
The same slowdown, however, could provide Asian economies an opportunity to offer themselves as an alternative to China, he said.
“The overall impact to Asian economies is rather moderate and, strictly speaking, slightly positive,” he said.
The Asia-Pacific region is the “global engine” for growth, contributing 60 percent to the world’s economic expansion, he said.
Disaster-prone countries like the Philippines should consider resilience when building new infrastructure.
A recent earthquake in Central Luzon killed over a dozen people and damaged Clark Airport, highlighting the country’s location in the
Pacific “Ring of Fire.” The Philippines is also battered by an average of 20 typhoons per year.
“Building back better is a concept, after the disaster, putting back society and the economy in a better situation than the status quo prior to the disaster,” he said.
“I think this shift in focus is quite an important element of building back better,” he said.
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