Despite the continuing weaknesses of our still fragile democracy, the Philippines is no longer known in international circles as the “sick man of Asia.” Since the beginning of the Third Millennium, as we saw in previous articles in this series, the Philippines has been constantly in the list of the most promising emerging markets, “breakout” nations, and the next generation of NICs (newly industrializing countries). These positive assessments of the Philippine economic future continued to pour in during the last four years, even when the Philippine political climate had darkened due to the perception by some outside observers that the present political leadership leaves a lot to be desired because of lack of respect for human rights, ineptitude in the handling of relations with China, and, more recently, tolerance of corruption among presidential cronies.
For example, just before the outbreak of the pandemic in early 2020, the Oxford Economics group came out with a list in November 2019 identifying 10 countries as the leading emerging markets that will dominate the global economy in the next decade. Among the 10 are six countries in the Indo-Pacific region which will surely lead the global economy in economic growth for many decades to come after the pandemic is put under reasonable control. The ranking is as follows: 1.) India; 2.) the Philippines; 3.) Indonesia; 4.) China; 5.) Malaysia; 6.) Turkey; 7.) Thailand; 8.) Chile; 9.) Poland, and, 10.) South Africa. The rankings took into account factors beyond just GDP figures and also considered funding availability and workforce growth, in which the Philippines ranked very high because of our young, growing and English-speaking population.
The short commentary in the summary of the report issued by Oxford Economics gives the following reasons for the second highest ranking given to the Philippines: “Currently led by the brash strongman Rodrigo Duterte, the Philippines are, much like Indonesia, a large island group, with huge economic potential. The Philippines is set to have the highest increase in its labor force of any of the top 10, alongside its GDP growth of 5.3%. This means that it will be one of the world’s fastest growing economies sooner rather than later.”
India got the top ranking because of “its massive GDP growth of 6.5%, and it’s likely to be the world’s largest economy one day not just within emerging markets. The country has a huge population and when fully utilized will be an unshakeable force across global markets.” In fact, within the next five years, it is very possible that India’s population will top China’s since the latter is suffering from “demographic suicide,” thanks to the one-child policy its government imposed for many years. Despite the recent effort of the Chinese government to encourage couples to have more children, the result has been discouraging. This is not a surprise since the lesson from Singapore is that once the contraceptive mentality has been ingrained in the minds of the women, no incentives work to encourage them to have more children. This rapid aging that China is already experiencing, which will intensify in the coming years, is one of the major reasons why China ranks only fourth in the ranking of Oxford Economics.
The reference of Oxford Economics to the highest increase in the labor force will remind us that the two strongest engines of growth before and after the pandemic are the remittances from some 10 million Overseas Filipino Workers (OFWs) and the huge dollar earnings of the BPO-IT sector. These two account for some 12% to 15% of the Philippine GDP. They would not be possible without our young, growing, and English-speaking population. During the pandemic, these were the two sectors that hardly suffered from the global meltdown. Despite the return of an estimated 800,000 OFWs who were laid off from their work abroad (especially in the Middle East), remittances from OFWs in 2020 dropped only by -0.3% while the whole economy was suffering from a GDP decline of -9.1%. For the first six months of 2021, OFW remittances grew at an average of 6%. As the whole world recovers, the demand for Filipino workers in the developed countries, especially for health workers and caregivers as well as service workers in the hospitality business will surely grow even more. Furthermore, the young and growing population (already at the 110 million level in 2020 and growing) will be a strong basis for high growth, considering that domestic consumption accounts for more than 70% of GDP. The Philippines, like China and Indonesia, will increasingly depend on the domestic market for its high growth in GDP, not on exports.
In addition to the very positive assessment of Oxford Economics about the long-term economic prospects of the Philippines, another think tank from the United Kingdom, the Centre for Economics and Business Research (CEBR), also presented the Philippines in a very good light as late as December 2020 (when COVID-19 was also raging all over the world). In a world economic forecast for 193 countries all the way to the year 2035, the CEBR foresaw the Philippines improving by 10 positions in the ranking in the World Economic League Table. Ranked 32 in 2020, the Philippines was forecast to rank 22 in 2035, one of the most improved among the 193 countries included in the study. CEBR forecasts that over the next five years, the annual rate of GDP growth is set to rise to an average of 6.7%. Between 2026 and 2035, CEBR forecasts that the average rate of GDP growth will dip slightly to 6.5% annually. Over the next 15 years, the think tank forecasts that the Philippines will move swiftly up the World Economic League Table rankings, from 32nd position in 2020 to 22nd in 2035. Here again, we have a completely independent institution issuing an optimistic long-term forecast about the Philippine economy.