An economist has bright prospects for the Philippines no matter the results of the 2016 elections. Dr. Bernardo Villegas said the Philippine economy will grow 6% to 7% regardless of who gets elected in next year’s presidential elections.
“Whatever happens in May 2016, even if we elect Vice Ganda, the economy will continue to grow at a high rate for the next 20 years,” he added during the Mandaue Business Summit held last Friday as part of Mandaue Business Month activities.
The main engines driving the country’s growth include remittances from overseas Filipino workers (OFWs), business process outsourcing (BPO) and knowledge process outsourcing (KPO) revenues, and the 40 or so million Filipino tourists who travel around the country.
“Last year, the country received US$28 billion in remittances from the more than 10 million overseas Filipino workers (OFWs). This grows 3-5 percent every year come hell or high water,” he further said.
According to Villegas, the BPO and KPO industries already generate US$18 billion in revenues every year and employ 1.1 million “very well-paid, highly-educated” workers.
He also noted the growing number of Filipinos visiting and talking about new and popular local destinations that has spurred the high growth of domestic tourism in the country.
Another positive development is the decision of around a hundred Japanese companies that plan to transfer their manufacturing facilities out of China.
Although the Japanese multinationals are looking at other Southeast Asian countries, one thing going for the Philippine is the industrial peace it has attained, he said, citing that there hasn’t been a labor strike in the last three to five years that ended in violence.
“These are things that do not depend on political developments. They will continue to happen whatever may occur in May 2016,” he pointed out.
New economic era
On the other hand, if the Filipinos manage to elect the right leader next year, especially one who is good at executing the hundreds of billions of infrastructure projects that didn’t happen under the present administration, Villegas believes the country will grow 8-10 percent from 2016 onwards.
“We are definitely in a new era in the Philippines. It is not an exaggeration to call the Philippines the new tiger of Asia,” Villegas said.
According to him, the country has reached its tipping point and is at a new level of growth from changes that happened over a quarter of a century.
He cited economic forecasts from such international credit rating agencies as HSBC, Goldman-Sachs, and Asian Development Bank (ADB), which are the ones singing the praises of the Philippines.
He listed a stable democracy, improving governance, strong macroeconomic fundamentals, labor peace, educated young population, high rate of savings due to OFW remittances, and a strategic location in the middle of East Asia as among the positive trends going for the Philippines.
On the other hand, he added, some of the challenges facing the country involved its high rate of poverty, low level of direct investments, corruption at the lower levels of government, and a Constitution that’s restrictive to foreign business.