Philippines to leapfrog to be 16th largest economy by 2050

A+
A
A-

The Philippines and Peru are among emerging economies that would become much more prominent in the next few decades, helped by demographics and rising education standards, with the Philippines set to leapfrog 27 places to become the 16th largest economy by 2050, according to a prediction of international bank HSBC.

The bank expected China to overtake the United States as the world’s biggest economy by 2050, and said strong growth rates in other developing countries would help drive the global economy.

“Plenty of places in the world look set to deliver very strong rates of growth. But they are not in the developed world, which faces both structural and cyclical head winds. They are in the emerging world,” the bank  said in a report “The World in 2050.”

HSBC based its forecasts on fundamentals such as current income per capita, rule of law, democracy, education levels and demographic change.

The bank said the Philippines would become a “star performer” in terms of  its economic leap in the global rankings.

HSBC said the Philippines was likely to post an average growth of 7 percent in the next 40 years.

Breaking down the average growth forecast, the bank said the country would likely grow by 8.4 percent from 2010 to 2020, by 7.3 percent from 2020 to 2030, and by 6.6 percent from 2030 to 2040, and by

5.8 percent from 2040 to 2050.

It said the advantage of the Philippines was its favorable macroeconomic fundamentals and improving governance.

Economic officials of the government often harp on what they call the country’s positive macroeconomic fundamentals that include stable inflation, sustained growth over the years (it grew even when the global economy shrank in 2009), stable banking and financial system, and improving fiscal position.

Growing population a plus

HSBC said the Philippines was also put at an advantageous position by its growing population, which, if properly educated and trained, should help the economy generate more income over the next decades.

The fact that the Philippines has relatively low income gives it much room for growth, and that its favorable fundamentals will help the country maximize that room, the bank said.

“The most potent recipe for growth is a country that scores highly on the fundamentals discussed but currently has low income per capita. These economies should deliver the highest growth in income per capita as they ‘catch up’ with those with similar fundamentals,” HSBC said.

Top 20

According to HSBC’s forecast, the Top 20 largest economies by 2050 will be China, United States, India, Japan, Germany, United Kingdom, Brazil, Mexico, France, Canada, Italy, Turkey, South Korea, Spain, Russia, Philippines, Indonesia, Australia, Argentina and Egypt.

The Philippines’ 16th rank by 2050 in terms of economic size marks a 27-notch improvement from its performance in 2010, said HSBC.

The bank thus said that the Philippines was expected to post the biggest leap in terms of economic ranking over the next four decades. “The Philippines looks set for a multidecade run of strong growth.”

HSBC said Peru should average annual growth of 5.5 percent over the same period.

The sheer pace of population growth in countries such as Nigeria and Pakistan means that these economies will swell in size to be included among the 100 biggest economies even if their incomes on a per-capita basis remain low.

HSBC said lower scores for rule of law in Latin America constrained its per capita income projections for the region though it noted that Brazil was making headway in this aspect.

Losers

“The losers are the small population, aging economies of Europe,” added the bank, which said the demographics in much of Europe underscored concerns about the debt problems faced by many of the continent’s governments.

If sufficiently open to modern technology, developing countries could enjoy many years of robust GDP growth although they could struggle for growth drivers once they have adapted to technological advances,

HSBC said.

“The initial years of development could be described as ‘copy-and-paste’ growth, as countries open themselves up and adapt to the world’s existing technologies. Once the ‘copy-and-paste’ growth is complete … many economies struggle and get stuck in what is often known as the middle-income trap.”

“But many of the countries we are considering are still at such an extremely low level of development that there are years of this ‘copy-and-paste’ growth ahead,” it added.

China

It was here that many of the pessimism about China was misplaced, the bank argued.

“One of the most commonly cited reasons for concern about China is the high rate of investment as a percentage of GDP … (But) we believe the strong rate of investment is entirely justified—providing China with much needed basic infrastructure,” it said.

The bank said high levels of education in Central and Eastern Europe meant that the regions could enjoy strong income per capita growth in the coming years before weak demographics eventually sap economic growth.

“While education rates are similar (to the West), the average income per capita in the central and eastern Europe block is just one fifth that of the developed world. For this reason … economies have great scope to catch up in income per capita,” HSBC said.

“Some of the smaller Eastern European countries—Romania, the Czech Republic and Serbia—(should) all do extremely well, particularly in the coming decade, before demographics prove to be more of a drag.” With a report from Reuters

Originally posted at 09:02 pm | Thursday, January 12, 2012

Inquirer Viber

Disclaimer: The comments uploaded on this site do not necessarily represent or reflect the views of management and owner of INQUIRER.net. We reserve the right to exclude comments that we deem to be inconsistent with our editorial standards.

  • http://pulse.yahoo.com/_AYITA5V33GYZSLC3G37UCVNTKA Ben

    Hmmm…why 2050 why not in 10 to 20 years or maybe less so I can still witness it? What`s the drag in our society since after all we started out as number two besides Japan and suddenly government policies hasten our decline from a proud society down to a somewhat like a beggar in which we are now?

  • http://profile.yahoo.com/52XTR33N6OBACI7UNMVVIZNRJA edet

    interesting,if RP willing to see it’s next door neighbour indonesia which by 2011 gain $19 billion dollar in FDI (biggest gain in southeast asia) 6.5 % gdp growth ( again that fastest in ASEAN)..and nevertheless a total GDP of $ 823 billion ( PPP $ 1.11 trillion ) a country that barely ten years ago being predicted to become the BALKAN of ASIA,by 2004 its GDP barely $ 240 billion,do not need prediction simply hard work.

  • http://pulse.yahoo.com/_JMC5U4MV3DXXTD4XNP7YY4TKWU Nap

    HSBC should have a short-term investment in the Philippines and making such wild speculation for their investment to grow.  more than 25 years since EDSA revolution and still we are the laggard of Asia.

    As long as there is a culture of corruption, and distrust among our people, then this will just be another dream and we will be a laughingstock of the outside world.

    We have a broken system that needs to be overhauled. 

  • Anonymous

    There are still people who know that predictions CAN but will NOT NECESSARILY come true.
    Anyways, to achieve 16th place will require:

    + More spending on infrastructure (that is what should be prioritized)
    + Election of better, more competent personnel into public offices (also actors can be like that, though seldom)
    + Improvement in education system (multiple choice exams are not really optimal)

    And, with the increase of consumption due to better economics comes the increase in waste amount. Actually, by now on, a waste management plan must be developed and then implemented. Or else, instead of more fun, we end up having more garbage in the landscape killing the fun.

     

    • http://profile.yahoo.com/GWZU3XESWP4KQXUEXGWL6UQGXI Ashkayna

      then, can we make this prediction happen? how? i don’t know, but one thing i know someone has to do it to make it happen, right? :D

      positive-thinking and proper mind setting will be of big help guys.

      • http://profile.yahoo.com/52XTR33N6OBACI7UNMVVIZNRJA edet

        indeed, btw Indonesia does not need to wait until 2050 to be be in “TRILLION DOLLAR ECONOMY CLUB”,they already there now.This is a country that have a lot of similarity with RP,but with bigger problem ,bigger challanges and all against the odds they made it.

      • Guest

        “indeed, btw Indonesia does not need to wait until 2050 to be be in
        “TRILLION DOLLAR ECONOMY CLUB”,they already there now.This is a country
        that have a lot of similarity with RP,but with bigger problem ,bigger
        challanges and against all the odds they made it.”

        They made it because the president(s) there didn’t focus and blame on the wrongdoings of the respective past administrations but focused on the national development (in this case Indonesia).

      • Guest

        “then, can we make this prediction happen? how? i don’t know, but one
        thing i know someone has to do it to make it happen, right? :D”

        Very funny. You contradict yourself.

        “positive-thinking and proper mind setting will be of big help guys. ”

        These two were also there in the 1960s and 1990s. The result is well-known and seen everyday. You forget other important factors, Ashkayna, and that is the implementation part. Proper implementation of the needed steps are necessary.

  • Anonymous

    Ang dami pa ring utak-alimango dito, kaya hindi uunlad ang Pilipinas dahil utak-alimango kayo, napaka pessimistic. hahahaha. 

  • http://pulse.yahoo.com/_FFVPH2R22XWJ3Z6QOP3WBA6KA4 EC

    Yes, it’s true. If only we can not have the likes of Gloria Arroyo as a president again.

  • Anonymous

    This article unbelievable but I like the prediction. The 2nd good thing; uplifts the morale of Filipino that there’s still hope for Philippine economy to grow. This maybe had something to do with Aquino’s Gov’t. campaign against corruption. The key really lies on good governance, transparency, eradication of graft and corruption. I do hope FOI Bill will be approved into law sooner.

    Thanks to the writer.

  • Anonymous

    Tama na ang patatalo rito. Ang prediksyon kung matutuloy laban in Pacquiao at Mayweather, kanino kayo pupusta?

To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.

Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:

c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City,Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94

editors' picks

advertisement

popular

advertisement

videos