Since 2012 (excluding the pandemic period) the Philippines’ economy has grown on average by 6% per year.
The Philippines has transformed into the new epicenter of Asian tensions. China ’s claims in the South China Sea, combined with the parallel strengthening of military ties between Manila and Washington, have ignited a region that was in itself very tense.
Since the beginning of the year, Beijing coast guard ships have repeatedly targeted Philippine boats in the midst of atolls, reefs, and maritime portions disputed between two countries that have now become rivals. Be careful though, because behind the geopolitical dossier, the American umbrella, and the military strengthening lies a topic ignored by many: the economic growth of the Philippines.
Of course, in 2023 the South-East Asian country failed to reach the ambitious target set, stopping at a GDP increase of +5.6%, well below the +7.6 % of 2022 and far from the desired target of between 6-7%.
Last year, the Philippine economy faced numerous thorny issues, including the surge in food prices and the persistent bottlenecks in the supply chain. The government of Ferdinand Marcos Jr. reacted by setting ceilings on rice prices, while the central bank raised interest rates to the highest levels in recent years, in an attempt to contain inflation. Yet something interesting is moving...
The silent growth of the Philippines
In the eyes of international investors, the Philippines represents something of an enigma: it is not a giant of the caliber of China and India, nor a large manufacturing nation like Vietnam, but it is not as backward as Sri Lanka or Bangladesh either. Numbers in hand, from 2012 to today (excluding the pandemic period) the Philippine economy has grown on average by 6% per year.
The Economist defined it as a silent boom which affected the presidencies of Benigno Aquino (2010-2016), Rodrigo Duterte (2016-2022), and, finally, Ferdinand Marcos Jr., the current head of the Philippines government. The future looks equally rosy. According to the World Bank, the Philippines will very soon become an upper-middle-income country, while McKinsey noted that Manila was the fastest-growing economy in all of Southeast Asia in 2023.
Then there are concrete facts to pay attention to. For example, the country is utilizing advanced technology to construct roads and bridges. In February, the government also selected a private consortium to renovate Manila’s main airport, where the first subway underground line is expected to be built by 2029. As if that wasn’t enough, the country enjoys an abundance of working-age citizens, and half the population still lives in the countryside. The Philippines, therefore, has considerable potential to be exploited to the fullest.
Manila’s Progress
The Marcos government has solicited foreign investment to improve broadband access - which is extremely uneven locally - and introduced a national digital identity system that should make it easier for Filipinos to do business and access government services online (70% of citizens have signed up).
Much more will need to be done: improve infrastructure, increase security, and create an environment capable of attracting foreign investments by competing with other regional countries (from Vietnam to Thailand).
However, the future of the Philippines depends on two factors that are difficult to control. The first concerns a possible victory of Donald Trump in the next US elections. In that case, The Donald could increase duties and raise tariffs, thus also damaging part of Manila’s exports (such as electronic products). The second calls China into question: in the event that tensions with the Dragon were to increase, the Philippine economic miracle could be nipped in the bud.
In any case, the Philippines can focus on two strong points: the remittances of its approximately 2 million citizens who work abroad (who send home the equivalent of 9% of the country’s GDP every year) and the strengthening of the tourism sector (annual tourist arrivals could rise from 5.5 million in 2023 to 43 million by 2030). Trump and China permitting.
Original article published on Money.it Italy 2024-05-13 07:18:00. Original title: La silenziosa crescita economica delle Filippine: nuovo miracolo asiatico in arrivo?
