Bonifacio Global City | PHOTO: BGC.COM.PH
The Philippines is seen to be one of the emerging economies in Asia-Pacific to drive global economic growth in the next 10 years, S&P Global said in a report on Thursday.
The S&P Global defines “emerging markets” as countries that have been or are transitioning toward middle- income levels, with good access to global capital markets, deepening domestic capital markets, and global economic relevance based on economic size, population and share in global trade.
With an average growth rate of 4.8 percent projected by 2035, the Philippines ranks third among the fastest-growing economies, behind Vietnam at 6.2 percent and India at 5.9 percent. Together with its regional neighbors, the country is also expected to contribute approximately 65 percent of global economic growth.
“Emerging markets will play a crucial role in shaping the global economy over the next decade, averaging 4.06 percent Gross Domestic Product (GDP) growth through 2035, compared with 1.59 percent for advanced economies,” the report added.
READ: PH economy grew 6.3% in Q2, outpacing most Asian nations
In the second quarter, the Philippines expanded by 6.3 percent buoyed by increased state spending and strong investments, marking the fastest expansion seen in four quarters.
This brought average first semester GDP growth to six percent, well within the government’s six- to seven-percent target for the year.
In order for the emerging country to sustain its growth, S&P noted that they need to boost productivity more than developed countries. It added that emerging markets that can take advantage of global trends, like the shift to renewable energy and changes in supply chains, are in a strong position to improve productivity.
“Indonesia, Chile, and the Philippines, among others, are well suited to supply metals and minerals required for the energy transition,” S&P said.
READ: PH is in ‘prime position’ to supply in-demand critical minerals – Marcos
While the debt watcher expected that majority of larger emerging markets to fail in reducing its debt to pre-pandemic levels in the next decade, it projected the Philippines to lower its debt-to-GDP ratio by 2035.
“Of the emerging markets with GDP over $300 billion, only Chile, India, Indonesia and the Philippines are projected to lower their debt-to-GDP ratio during this period,” it added.
The government set the debt-to-GDP ratio at 60.6 percent this year, slightly above the 60 percent that lenders deem manageable for developing economies. For the second quarter, the debt-to-GDP ratio placed at 60.9 percent.
Moreover, the debt watcher believed that the role of the emerging countries in the global economy will continue to rise in the coming year as their share of the global economic output increases.
However, it stressed that in order for these countries to maintain their appeal for investments, they need to meet economic expectations of their populations which helps ensure social stability and policies.