Trade Secretary Ramon Lopez found the latest world competitiveness report “hard to believe,” after the country’s overall ranking suffered the most significant decline in Asia and the Pacific despite its recent economic growth.
The country fell nine notches in the 2018 World Competitiveness Yearbook (WCY), ranking 50th out of 63 countries, from last year’s ranking of 41st.
This is the country’s lowest ranking since 2014. The Philippines usually ranks either 42nd or 41st in the annual report published by the International Institute of Management Development (IMD).
Moreover, in comparison to other countries, the Philippines also saw its rankings take a deep dive in all four main factors that the report evaluated.
These are economic performance (24-notch drop to 50th place), government efficiency (7-notch drop to 44th place), business efficiency (10-notch drop to 28th place), and infrastructure (6-notch drop to 60th place).
Lopez, who cochairs the National Competitiveness Council (NCC), said the report was “hard to believe.”
He also questioned the full list, noting that the report only tracked less economies when compared to nearly similar reports which covered more economies.
WYC only covered 63 economies, but he noted that the World Bank’s Ease of Doing Business report covered 190 economies, while the World Economic Forum’s Global Competitiveness Report covered 137 countries.
“Thus, I am assuming many much smaller economies [were] not tracked by IMD,” he told reporters in a mobile message, adding that the report only covered half of the 10-member states of the Association of Southeast Asian Nations (Asean).
But Lopez is optimistic that the country’s ranking will improve.
“I believe the fast growth we are having, infrastructure buildup and various reforms in ease of doing business, [as well as the] growing middle class and demographic attractiveness to investors will enable us to improve the rank soon,” he said.
The report did acknowledge the country’s economic expansion last year of 6.7 percent, ranked the fifth highest in WCY.
However, other macroeconomic indicators, such as a weaker peso, “overcame this improvement,” according to a statement from the AIM Policy Center, IMD’s country partner for WYC for more than two decades now.
In a separate policy brief on the same report, AIM said these indicators included the trade account deficit last year and the slower growth rate in terms of foreign direct investments (FDIs).
“The economy’s current account deficit—roughly the difference between imports and exports—more than doubled in 2017 compared to 2016. [FDI] inflows posted record levels last year, but its rate of growth slowed down to only about half that of 2016,” it said.
“In addition, the Philippine peso substantially depreciated against most major currencies in 2017, even posting 11-year lows against the US dollar in the middle of the year,” it added.