The Philippine economy is expected to achieve a faster annual growth of around 8 percent in the coming years, if the next administration adopts the right policies, London-based Capital Economics said in a report.
Capital Economics, an economic research consultancy company, said in its “Emerging Asia Economic Weekly” the Philippines was in a well-placed position for economic growth of around 8 percent or more, even after the change of administration in 2016.
“There is clearly a lot of uncertainty over who will replace Aquino and what kind of president they will turn out to be.What we can say with more certainty is that Aquino will leave the country in better shape than it has been in for a long time,” economists Gareth Leather and Daniel Martin said in the report.
“With the right policies in place, we see no reason why the Philippines should not be able to follow in the footsteps of other countries in the region, which at a similar stage of development were able to grow by around 8 percent-plus for a couple of decades,” the authors said.
The average 5.8 percent economic growth since 2010, according to Capital Economics, is traced to the good governance of the present administration.
“The improvement can, in large part, be credited to Aquino, whose tough anti-graft stance has impressed investors,” the report said.
Capital Economics said there were still risks on the upcoming elections, because people tended to choose personality of the candidate over policies.
“The Philippines has a poor track record when it comes to electing competent leaders who have their country’s best interests at heart,” Capital Economics said.
The economy grew 5.3 percent in the first half, below the government’s target of 7 percent to 8 percent.
The report said the country had healthy fundamentals such as low government debt and small budget deficit.
The Philippines is at very low risk spot, according to the Capital Economics Risk Indicator which the company uses to assess the likelihood of a financial crisis.
Capital Economics also said remittances from Filipinos working overseas were expected to continue to grow at a steady pace, which would support consumption growth.
“Healthy fiscal position means there is scope for the government to boost growth by increasing spending,” the report said.
The report said the rapidly growing working age population would provide a major boost in the economy.
This will aid the Philippines to enter into what is known as a demographic sweet spot, it said.
Capital Economics said with the low labor cost in the country, the Philippines could be a major beneficiary, as low-end manufacturing leaves China in search of cheaper locations.