How do experts assess the prospects of the Philippine economy in the coming years?
HSBC Global Research believes that after two decades of comprehensive economic reforms, the Philippine economy is poised for take-off, with the country’s hardworking people as its main source of growth.
The research firm says that among the members of the ASEAN, it is the Philippines, with a working-age population that will be the last to peak in 2035, that can enjoy the demographic dividend. This would, in turn, boost gross domestic product per capita and increase the absolute savings available for further investment. Between 2024 and 2029, average incremental savings in the economy are expected to increase by $17.7 billion each year.
Government data indicate that gross national savings amounted to P6.6 trillion based on 2023 prices. This represents an increase of 35 percent from P4.89 trillion in 2022, as savings from households and the government bounced back from three straight years of contraction.
Employment levels in the country have been higher than predicted, boosted by job creation focused on digitalization and the greater participation of women in the workforce.
And while many economies in the world have been experiencing rising public debt levels, the Philippines has strengthened its fiscal coffers to finance long-term investments needed to boost its overall potential.
While the Philippines may not have experienced the same boost in manufacturing as the rest of its regional peers, it has found its niche in exporting ‘light-asset’ services,” or the digital, telecommunications and creative fields, including business process outsourcing and professional consulting.
From another direction, the International Monetary Fund predicts that the Philippine economy will rise to become the 28th largest economy in the world by 2029 from its current 33rd spot.
But the World Bank (WB) sets several conditions for such growth to take place. First, the government must immediately boost investments in education, jobs and health to avoid ending up with an economy backed by a legion of young workers who are not productive enough to help fuel its growth. The WB said the country has only one generation left—or about 20 to 25 years—before the window to harness the benefits of its relatively young population closes, as it is projected to see another demographic shift after that.
What should the government do in the meantime? The Washington-based multilateral lender urges the Philippines to ramp up investments in developing Filipinos’ human capital—knowledge, skills and experiences that individuals accumulate throughout their lives. It is really important, it said, to invest now so that the younger generation poised to enter the labor market will have better capacity and better skills to be able to join the workforce in an effective manner. Sound advice, we think, that the administration should consider if we want the economy to grow in the years ahead.
