MANILA, Philippines–The Philippine economy is projected to expand significantly over the next decade and a half to become one of Southeast Asia’s heavyweights, fueled by a growing middle class and a resurgent manufacturing sector.
IHS Global, a think tank, said that the government’s business-friendly policies would lead to higher levels of investment, helping create more jobs and raise incomes in the country.
Over the next five years, gross domestic product (GDP) growth may average 5.5 percent, forecasts showed. If this expansion were to be sustained, per capita income, or the money the average Filipino makes, could double to $6,000 a year by 2024. By 2029, the size of the economy is expected to more than triple from $310 billion in 2015 to over $1 trillion.
“These significant increases in per capita GDP will create one of Asean’s largest consumer markets of the future, as the middle class rapidly expands over time,” IHS Global Asia Pacific chief economist Rajiv Biswas said. “This will help attract foreign direct investment by multinationals into the Philippines manufacturing and services industry.”
The main growth drivers for the Philippines economy are the rapidly growing outsourcing sector and the strong flow of remittances from Filipino workers abroad. The expected gains may be attributed to the large pool of university-educated workers as well as the strong English-language skills of the workforce in the country.
In the Philippines, the export revenue from the business process outsourcing (BPO) sector more than doubled between 2008 and 2014, reaching an estimated $18 billion in revenues by 2014, while the total number of employees in the IT-BPO industry exceeded 1 million.
By 2016, the Philippines’ IT-BPO industry is projected to have 1.3 million employees. The rapid growth of this industry is also driving economic development in a number of cities across the Philippines, with Manila and Cebu now ranked among the world’s leading BPO hubs.
Also, remittances from Filipino workers abroad rose to a new record of $26.9 billion in 2014—up 6.2 percent from the level seen in 2013, providing a key source of strength for the Philippines’ balance of payments.
Overseas workers’ remittances directly support consumer expenditure and residential housing construction, becoming a key driver of GDP growth in the Philippines.
In the long term, the development of the Philippines will depend on the manufacturing sector’s competitiveness—whether it can effectively harness foreign and domestic investment flows.
“This will require considerable improvement of the business climate, with the Philippines still ranked very low globally on the World Bank’s ease of doing business rankings,” Biswas said