Philippines to lead growth among region's investment darlings – DBS Ltd.
The expectations continue to rise for the Philippine economy's growth prospects.
The country is seen to have the highest growth potential in the eight years to 2020 among Southeast Asia's new investment darlings – Thailand, Indonesia and the Philippines, or the TIP economies, a new report said. But the report's author, Singapore-based DBS Ltd. economist Eugene Leow, warned: “For the Philippines, it is easy to remember the many false dawns over the last few decades."
Manila is seen to have the highest growth potential in the years to 2020 among Southeast Asia's new investment darlings – Thailand, Indonesia and the Philippines, or the TIP economies, a new report said.
In a June 18 report titled “Road map to 2020: TH, ID, PH,” Singapore-based DBS Ltd. economist Eugene Leow said, “The Philippines has the highest growth potential amongst the TIP economies.”
Thailand's gross domestic product (GDP) growth is seen averaging at 5.2 percent until 2020, while both Indonesia and the Philippines' expansion for the eight-year period is projected at 6.3 percent, according to the report.
Leow said the Philippines “can potentially run at trend GDP growth of 7 to 8 percent,” as its healthy fiscal position, manageable inflation and a financial system awash with cash has yet to be fully utilized.
But he said, “A more conservative growth figure of 6 to 6.5 percent is realistic in the coming eight years as we factor in a gradual improvement in investment rates.”
The report noted that attracting sufficient investments along with generating jobs and utilizing human capital effectively will remain the “key challenges.”
Even as the Philippines' largely consumption-driven economy grew at the fastest rate in Asia at 7.8 percent in the first quarter, foreign direct investments (FDI) remain the region's lowest at $1.3 billion in the period.
Low investments from both domestic and international fronts has seen joblessness at a stubbornly high 7.5 percent of the labor force.
FDI as a percentage of GDP is projected to rise towards 3 percent in 2016 from 1 percent in 2012, while domestic investment is also likely to pick up, pushing capital formation as a proportion output to 25 percent in 2016 from 20 percent in 2012, according to DBS.
Leow said this forms part of the Philippines transitioning into a more investment driven economy.
“Investor perception of the Philippines has changed... [T]he Philippines is several years behind Indonesia and is only in the nascent stages of investment-led growth,” the report read.
Debt-watchers Fitch Ratings and Standard & Poor’s Ratings Services' decision to award the country investment grades are seen o fuel much needed foreign and domestic investments.
Investments are also seen to benefit from big-ticket infrastructure projects under the flagship public-private partnership program.
The report noted that “the Philippines has the strongest external account balance, a banking sector best able to extend credit and a solid fiscal policy that is not threatened by heavy subsidy spending.”
“For the Philippines, it is easy to remember the many false dawns over the last few decades,” Leow said.
“But the current turnaround holds much promise even as the country needs to attract real investment,” he added. — Siegfrid O. Alegado/BM/HS, GMA News
The country is seen to have the highest growth potential in the eight years to 2020 among Southeast Asia's new investment darlings – Thailand, Indonesia and the Philippines, or the TIP economies, a new report said. But the report's author, Singapore-based DBS Ltd. economist Eugene Leow, warned: “For the Philippines, it is easy to remember the many false dawns over the last few decades."
Manila is seen to have the highest growth potential in the years to 2020 among Southeast Asia's new investment darlings – Thailand, Indonesia and the Philippines, or the TIP economies, a new report said.
In a June 18 report titled “Road map to 2020: TH, ID, PH,” Singapore-based DBS Ltd. economist Eugene Leow said, “The Philippines has the highest growth potential amongst the TIP economies.”
Thailand's gross domestic product (GDP) growth is seen averaging at 5.2 percent until 2020, while both Indonesia and the Philippines' expansion for the eight-year period is projected at 6.3 percent, according to the report.
Leow said the Philippines “can potentially run at trend GDP growth of 7 to 8 percent,” as its healthy fiscal position, manageable inflation and a financial system awash with cash has yet to be fully utilized.
But he said, “A more conservative growth figure of 6 to 6.5 percent is realistic in the coming eight years as we factor in a gradual improvement in investment rates.”
The report noted that attracting sufficient investments along with generating jobs and utilizing human capital effectively will remain the “key challenges.”
Even as the Philippines' largely consumption-driven economy grew at the fastest rate in Asia at 7.8 percent in the first quarter, foreign direct investments (FDI) remain the region's lowest at $1.3 billion in the period.
Low investments from both domestic and international fronts has seen joblessness at a stubbornly high 7.5 percent of the labor force.
FDI as a percentage of GDP is projected to rise towards 3 percent in 2016 from 1 percent in 2012, while domestic investment is also likely to pick up, pushing capital formation as a proportion output to 25 percent in 2016 from 20 percent in 2012, according to DBS.
Leow said this forms part of the Philippines transitioning into a more investment driven economy.
“Investor perception of the Philippines has changed... [T]he Philippines is several years behind Indonesia and is only in the nascent stages of investment-led growth,” the report read.
Debt-watchers Fitch Ratings and Standard & Poor’s Ratings Services' decision to award the country investment grades are seen o fuel much needed foreign and domestic investments.
Investments are also seen to benefit from big-ticket infrastructure projects under the flagship public-private partnership program.
The report noted that “the Philippines has the strongest external account balance, a banking sector best able to extend credit and a solid fiscal policy that is not threatened by heavy subsidy spending.”
“For the Philippines, it is easy to remember the many false dawns over the last few decades,” Leow said.
“But the current turnaround holds much promise even as the country needs to attract real investment,” he added. — Siegfrid O. Alegado/BM/HS, GMA News
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