The Philippines’ ranking as one of the fastest-growing economies in Asia, beating even global powerhouse China, is made more significant by the fact that the country is turning out an impressive performance while the global economy is being rattled by uncertainties, such as the United Kingdom’s exit from the European Union, and rising protectionism, particularly in the United States.
Despite the volatilities in the international markets, our fundamentals remain strong. Only the stock market is weakening, but it’s also happening all over the world. Our tycoons continue to invest, even in areas they shunned in the past, like Mindanao.
Unlike other emerging markets, we don’t rely heavily on foreign direct investments (FDI) although, of course, we welcome and encourage foreign businessmen.
Even then, the strong performance of the Philippine economy serves as a magnet for foreign investments. In November 2016 alone, FDI recorded net inflows of $756 million, up 59.4 percent from $474 million in the same month in 2015. For the first 11 months of 2016, net FDI inflows totalled $7 billion, up 25.4 percent from the same period in 2015.
The Bangko Sentral ng Pilipinas (BSP) says the continuing FDI inflows were buoyed by investors’ confidence on the domestic economy on the back of sound macroeconomic fundamentals and sustained growth potential.
Thus, international think tanks consider the Philippines as among the countries least vulnerable to uncertainties in the global markets. The World Bank expects the Philippine economy to grow by 6.9 percent this year, following the 6.8-percent growth posted in 2016, and will reach the 7.0-percent level in 2018.
The international lender says annual growth in terms of Gross Domestic Product (GDP) will average 6.8 percent during the period 2017 to 2019, supported by infrastructure spending, remittances and the business process outsourcing (BPO) industry.
Strong consumption on the back of robust remittances and the BPO industry, the government’s intensified focus on infrastructure spending, the continuing expansion of the industry sector, low debt levels and healthy reserves position are among the major factors that will drive our economy amid the global uncertainties.
Last year, overseas Filipinos sent home a total of $26.9 billion, up 5 percent year-on-year, exceeding the BSP’s growth forecast of 4 percent. For 2017, remittances are projected to grow also by 4 percent to reach $27.7 billion.
In another report, the BSP said gross international reserves stood at $81.04 billion as of end-January 2017, enough to pay for 9.2 months of imports and payments of services and income. It’s also equivalent to 5.8 times the country’s short-term external debt.
One good thing about the performance of the Philippine economy is that it is no longer dependent on a single factor, such as remittances, which shielded us from previous global crises. Today, we are seeing the resurgence of manufacturing industries along with the expansion of the services sector. Both public and private consumption remain strong. As BSP Governor Amando Tetangco says, the drivers of growth are becoming more diversified.
Also, the economy’s strong performance last year, which is expected to continue in the coming years, shows that fast GDP growth is no longer a glitch. We may be over the boom-and-bust cycle of the past and, with the growth drivers intact, we may finally be on the sustainable growth trajectory.
We may also be seeing some indications that the economic growth is becoming more inclusive. A survey conducted by the Social Weather Stations (SWS) last December found 37 percent of respondents saying their lives improved from 12 months ago, and 21 percent saying they worsened, yielding a +16 “net gainers” score, which SWS classifies as “very high.”
The same survey found 48 percent of respondents expecting their personal quality of life to improve in the next 12 months (optimists) and 3 percent expecting it to get worse (pessimists), yielding a “very high” net personal optimism score of +45.
It seems that our long-held dream of sustainable and inclusive growth is getting closer to reality.
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1 comment
How can there be “inclusive growth” when the agriculture sector is still not developed?