Philippines: En route to phenomenal progress

Philippines, the third largest economy in the ASEAN region is a success story by all means. It is growing, and is one of the most on-track economies in terms of internal and external calculus. With a growth rate of 6.8 per cent, it is estimated to shoot over the target and register a surplus budget. Many in the region say Philippines needs to slow down so that it is at pace in the long run. Philippines is among the most competitive and roaring economies in Southeast Asia, and according to the International Monetary Fund, it is the 13th largest economy in Asia.

Many of the macroeconomic indicators of the country are promising. It has remained resilient to global upheavals, and strategically hasn't become a pawn in the hands of regional rivalry. Philippines has successfully addressed the unemployment syndrome to a greater extent, as it stands today at 6.7 per cent, and helped alleviate the lot of the poor. The World Bank says that Philippines' growth outlook remains positive but subject to downslide risks. The stakes, nonetheless, are many as the country is dependent on overseas workers' remittances and business process outsourcing. Remittances, mostly from the Middle East, Europe and the United States, are equivalent to 12 per cent of the GDP. However, as the fastest growing economy in the ASEAN region, Philippines is likely to retain its buoyant domestic demand that drove growth up to 6.8 per cent in 2016. 

The new administration of President Rodrigo Duterte is more focused on the internal and external equities of the state, and is making a consolidated effort to drive out lawlessness and usher in stability at the grassroots level. It is furthering reforms to enhance the overall entrepreneurial environment, which has always been at a slow pace in Philippines, and develop the private sector in order to generate broad-based job growth. 

A country of over 100 million people, speaking more than 80 languages and dialects, and spread over 7,000 islands in the Western Pacific is an indispensable reality, and a force to reckon with. Agriculture constitutes a major component of its economy, whereas industrial production, electronics, apparel, shipbuilding and processed food and beverages are other prime revenue generation avenues. The country is yet to broaden its medium and heavy-mechanical industrial base, and the entrepreneurial sector is in need of recognition. 

Philippines' public debt is around 37 per cent of its GDP, and government spending amounts to 19 per cent of total annual budget. The areas where Manila should concentrate are per capita income, and developing the country at par. Rural backwardness and a booming middle class with limited access to amenities of civic life are the country's phenomenal riddles. 

Philippines' has to broaden its base as it invites foreign investment. The fact that investment in several sectors is restricted acts as an immediate obstacle on the pace of development. On the bright side, the Central Bank recently said it would lift moratorium on granting of new banking licences, and it is likely to open new vistas of trade and commerce amalgamation in the region and beyond. At present, the value of exports and imports equals 61 per cent of GDP, and taking into account the sprawling geography of the country and its open-ended maritime linkages, the economy could make unprecedented breakthroughs in several sectors of cooperation.

Philippines has an opportunity to realign its national priorities and register itself as a commendable power. This year the country's growth surpasses even that of China, which stands at 6.6 per cent. The political upheavals in the country under President Duterte's quest to root out gangsters and drug mafia poses immense challenges, but they are to be faced squarely in national spirit. Duterte policies even project a growth rate of up to 7.5 per cent, aided by gains from the political process. 

Manila plans to ramp up infrastructure spending, which would raise the budget deficit to around 3 per cent, providing stimulus to the economy. Once the cycle of growth, spending and human development index takes roots in the Philippines, poverty will take an instant nosedive. Duterte would be better advised to seriously look into a couple of other social evils such as cronyism and corruption, apart from drug trafficking, to help Philippines climb the ladder of success in the comity of nations, and inadvertently reinvent the versatile entrepreneurial base of economy.

Source: Khaleej Times