In their recently released Asia 2020 Report, one of Asia’s largest financial services groups DBS Group Holdings Ltd. said that the Philippine economy may grow 80% larger by 2020, with GDP growth trending towards 6% by that year.
The report cited the Aquino administration’s efforts to initiate reforms in finances and public-private partnerships on investments. Among these are the fiscal reforms that are geared toward instituting a culture of transparency and accountability. DBS also said that this should translate into an increase in FDI inflows, and should supplement the rising domestic savings, the rate of which has increased from 11% in 2004 to 18%.
The report said that since these reforms were begun in 2011, “the [Philippines’] budget deficit has narrowed sharply in the first half of the year. This complements the budget consolidation trend since the early 2000s and fiscal stress is increasingly less of a concern.”
DBS also commended the government’s efforts to increase investment, among them a new structure for project approvals and implementation, and measures to counter corruption.
While the report considers the Philippines’ high youth population as an advantage, it also concedes that rapid population growth–with the population expected to increase by 19 million by 2020–may be a challenge. As such, it has also cited favorably the attention paid to population management.
The report says, “Over the coming decade, economic growth will be respectable with much depending on policy and whether the large labor pool and resource endowment–which include gold, nickel and copper–can be tapped upon.”
Overall, DBS has a “cautiously optimistic view” of the Philippine economy. Reforms are expected to proceed at a moderate rate, and that, along with the growth in the economy, income levels will also be higher by 45% than at present. Coming in the wake of positive assessments from a number of different agencies and groups, this DBS report is yet another affirmation of the government’s efforts to achieve inclusive economic growth, through promoting a healthy and honest business climate and a culture of transparency and accountability in governance.
The ASIA 2020 report can be accessed here