PH seen as ASEAN’s next ‘tiger economy’

MANILA — Although a worsening infrastructure deficit, poverty and underemployment, and weaker global export demand have presented challenging headwinds, the Philippine economy is on track to surpass recent highs, making it the most likely to become the next “tiger economy” among ASEAN countries, according to the latest report by Oxford Business Group (OBG).

Now on its 8th year “The Report: The Philippines 2017” said the Philippines services sector will offset losses in agriculture, while manufacturing and industrial growth provide promising employment opportunities, supporting growth in value-added production to be able to sustain growth momentum.

Infrastructure spending is also set to become a major driver, with new transportation projects slated to improve trade flows and reduce operating costs.

At the same time, fiscal and debt management policies should keep borrowing at sustainable levels, as ongoing reforms keep the government on track to meet its growth factors, it added.

The report cited the upgraded the IMF GDP growth target to 6.8 percent as result of robust domestic demand, a gradual recovery in exports and fiscal stimulus.

It also cited the IMF’s forecast that a 7-8 percent GDP growth is attainable over the medium term while also painting a positive near-term outlook.

Paulius Kuncinas, managing editor for Asia for Oxford Business Group, said that a review on ASEAN economies point to the Philippines as the next tiger economy in the region despite strong growth also being experienced in other ASEAN countries such as Vietnam, Singapore and Myanmar.

“The consensus is it is going to be the Philippines as the next tiger economy.  The simple answer is that the Philippines is unique because it is a knowledge and service-based economy and a consumption-led,” said Kuncinas even as he raised similarity of the Philippines to the US economy in terms of GDP and economic structure.

He cited the “hot” BPO sector and lots of money flowing into the real estate sector especially in Metro Manila.

Kuncinas, however, warned that too much concentration in these sectors can pose risks and challenges that could derail growth.

“Concentration is piling up on these sectors,” he said noting of the neglect in lots of other sectors such as mining and minerals industries, which could be a big push if added into the economic mix of the country.

Other growth sectors that will contribute to growth include tourism because of its service export potential, but Kuncinas said there is a lot of catching up to do in this area.

He also urged government to pay attention to the ICT sector because it complements every other sector’s growth.

The infrastructure of the country like power was cited to play a huge importance but these are being challenged by regulations and funding, he added.

There is also a big divide in the country not just economically but socially and digitally that policy makers tend to overlook, he said.

There is also a financial divide with Metro Manila posting high credit growth but there is a large portion in the provinces with no banking services.

He cited too much emphasis in the already congested Metro Manila. Government should push for more developments in the rural