IHS Markit: Philippines to be a trillion-dollar economy by 2032
MANILA, Philippines – Amid expectations of sustained, long-term “dynamic” growth, the Philippine economy is poised to double by 2026 en route to a gross domestic product (GDP) worth $1 trillion by 2032, research firm IHS Markit said.
In a report titled “Philippines Tiger Economy Still Set for Dynamic Growth,” IHS Markit Asia-Pacific chief economist Rajiv Biswas also said that three years from now, the country will reach the upper middle-income status as robust economic growth trickles down to household incomes.
Biswas said that “despite the significant economic development challenges confronting the Philippines, both the Aquino and Duterte administrations have made considerable progress by delivering sustained rapid economic growth since 2012.”
Biswas noted that the gross domestic product (GDP) grew by over 6 percent during the last seven years.
“With per capita GDP having shown rapid growth since 2010, the total number of middle-class households has been growing rapidly, driving consumption spending. By 2022, the Philippines is projected to reach per capita GDP exceeding $4,000 per person, which would push it into the ranks of upper-middle-income developing countries, according to World Bank classifications,” Biswas said.
“Rapidly growing household incomes in major cities, led by Manila, will drive the growth of the domestic consumer market,” he said.
For Biswas, strong remittances, buoyant services exports especially by the information technology-business process outsourcing (IT-BPO) and tourism sectors, sustained robust electronics exports, “substantial progress” in reducing the share of government debt to the economy, and the Duterte administration’s ambitious “Build, Build, Build” infrastructure program were the key growth drivers in recent years.
Biswas said GDP growth will also be about 6 percent this year and next year.
With economic expansion seen continuing over the medium term, the Philippines’ GDP would double from $330 billion last year to $672 billion in 2026, Biswas said.
Moving forward, “the GDP of the Philippines is forecast to exceed $1 trillion by 2032, with per capita GDP reaching around $8,200,” he added.
However, Biswas said, “significant challenges remain to the nation’s economic development, including weak infrastructure and a relatively uncompetitive business climate compared to other East Asian peers.”
“The comparatively low ranking for the business climate of the Philippines compared to other large Southeast Asian developing countries is reflected in relatively weak foreign direct investment inflows. In 2018, the Philippines recorded FDI inflows of $9.8 billion, compared with FDI inflows of $29.3 billion in Indonesia and $19.1 billion in Vietnam,” he noted.
“With the Philippines having clocked up a record trade deficit of $41.4 billion in 2018, a key priority will be to make the Philippines more competitive as an investment hub for multinationals, in order to boost exports of goods and services and narrow the trade deficit,” he added.
A trade deficit meant that the country’s imports were more than its exports.
Also, “despite the significant progress in achieving higher living standards during the past decade, one of the key economic development challenges facing the Philippines is the high level of poverty, particularly in rural regions,” Biswas said.
As such, Biswas acknowledged the Duterte administration’s comprehensive tax reform program as one of the “significant” economic reforms that would boost revenue collections to finance public infrastructure development.