EIU: PH to be among fastest-growing economies in 2020s
The Philippine economy will remain among the rosiest across the globe in the coming decade partly due to its demographic sweet spot and educated workforce, according to the Economist Intelligence Unit (EIU).
In a Dec. 19 report titled “The next decade,” Simon Baptist, EIU global chief economist and managing director for Asia, said that “over the next decade, the world will have to get used to a slowing China. I expect that growth will be roughly half as fast in the 2020s as it was in the 2010s.”
Baptist nonetheless said that in the 2020s, “the fastest-growing countries will be in Africa (although not Nigeria) and South and Southeast Asia, with Bangladesh, Kenya and the Philippines all looking at a strong decade.”Responding to the Inquirer’s query, Baptist said in a social media post that the following augured well for the Philippines’ sustained strong economic growth moving forward: urbanization reducing natural-disaster exposure, political stability, English skills, trade openness and population growth.In the report, Baptist said that in the 2020s, ageing populations would be a global concern.“On the one hand, this will mean near-zero growth for the economies whose populations are ageing and declining the fastest, like Japan, Italy and Portugal. But it will increasingly cause difficulties—such as strengthening currencies and aged-care needs—in emerging markets like Chile, Russia and Thailand,” Baptist said.
In contrast, the Philippines has a relatively young population.
Last week, Finance Secretary Carlos Dominguez III pointed out that “the Philippines is poised to reach what has been coined as the ‘demographic sweet spot.’”
“As the populations of some of the more mature economies in Asia begin to age, we are looking forward to the entry of millions of young Filipinos into the workforce. We must invest in them and ensure that they are globally competitive,” Dominguez said.
However, Baptist said two developments pose risk to robust Philippine growth, namely: automation in the business process outsourcing (BPO) sector, and climate change.
In a report in November, the World Bank warned that while “technology has given the country a thriving BPO sector … technology may also take it away, as some tasks become increasingly automated.”
The BPO industry is the country’s biggest dollar earner after cash remittances from Filipinos living and working overseas, but the so-called fourth industrial revolution may wipe out jobs human beings do.
“Advances in robot technology and artificial intelligence have stoked global fears that many jobs may disappear, and two studies claim that half of jobs in the Philippines are at high risk for automation. However, the decline of ‘middle-skill’ jobs seen in the developed world is not happening in the Philippines, and the country’s low wage level will slow the rate at which technology substitutes for labor. Policies to boost the country’s digital infrastructure and worker skills can make technology more job-enabling than job-replacing,” the World Bank said in its “Systematic Country Diagnostic of the Philippines: Realizing the Filipino Dream for 2040” report.
Also, “global heating threatens to devastate the economy over the long term in the absence of efforts to adapt,” the World Bank added.
“The Philippines’ very high exposure to natural hazards poses a principal threat to economic growth and inclusion. Natural disasters generate large costs for the economy, which are borne disproportionately by the poor and vulnerable. In the absence of mitigation and adaptation measures, climate change may have massive impacts on economic growth and welfare by accelerating myriad disaster and environmental risks,” the World Bank noted.
“Over the long term, climate change poses the largest threat to the prosperity of the Filipino people. Under a pessimistic projection, climate change could end all economic growth in the country by roughly 2075, and the median Filipino would never join the global middle class,” according to the World Bank.
As such, the World Bank recommended a wide array of adaptation initiatives to mitigate the impact of climate change.
“These include helping farmers shift to climate-resilient cropping systems, protecting mangroves and sensitive coastal areas to reduce the impact of typhoons, and better managing water resources. The Philippines has a risk resiliency program to enhance the integration of climate adaptation priorities into the national budget, but the program has not yet become an effective vehicle for action,” the World Bank said. INQ
