NextGen Day

Whether you believe it or not, the Philippines can return to the top of the global economy if we get back on track before the epidemic.

Dr. Bernardo Villegas, a top Harvard-educated economist, made this prediction during a Center for Strategy, Enterprise, and Intelligence (CenSEI) webcast on Philippine economic prospects on January 28.

Villegas positioned the Philippines among the world’s or region’s leading economies in years and decades ahead, as predicted by top global think tanks and international banks, during a Friday discussion cosponsored by The Manila Times, Microsoft, San Miguel Corp., and RCBC.

Based on 2018 economic production or gross domestic product, the International Monetary Fund (IMF) has already ranked the Philippines No. 3 in East Asia among “The Next 11 Emerging Engines of Growth” after the “BRIC” economies of Brazil, Russia, India, and China (GDP).

Our commitment before the pandemic

In addition, Oxford Economics rated the Philippines second only to India on its list of the “Ten Emerging Markets That Will Dominate the Global Economy in the Next Decade” in the 2020s. Indonesia, China, Malaysia, Turkey, and Thailand rounded out the top seven economies, all of which are Asian.

Despite the pandemic, the World Economic League Tables predicted that the Philippines would rise from 33rd place last year to 28th place in 2025 and 22nd place in 2035.

One of the Philippines’ strengths, according to Dr. Villegas, has been the country’s strong macroeconomic and financial leadership and institutional monitoring throughout the last two decades, with extremely capable central bankers and finance chiefs appointed by consecutive administrations.

That is one of the main reasons why, in May 2020, The Economist magazine ranked the Philippines sixth among emerging economies based on four key financial strength indicators: public debt and foreign debt as percentages of GDP, borrowing costs, and the size of currency reserves in relation to external debt payments.

Another projection: Hong Kong & Shanghai Banking Corp. (HSBC) predicted that the Philippines would rank 16th among the world’s 30 largest economies in 2050 in its “The Wider World in 2050” study.

This puts it ahead of Indonesia, Australia, and even Saudi Arabia and Thailand, according to HSBC’s prior assessment. One important factor is our young population, which is predicted to generate enormous economic production as economies age.

Taking advantage of our assets

Can the Philippines re-establish the economic trajectory outlined by international experts and studies mentioned by Dr. Villegas?

He saw big returns from being in the most dynamic region and shifting to upper-middle-income status, which would boost discretionary spending and encourage new sectors beyond basic requirements, in addition to good macroeconomic and monetary management and growth-driving demographics.

In addition to the widely recognized economic benefits of the Build, Build, Build infrastructure program, vast natural resources, particularly tourism destinations, and increasing expansion outside of Metro Manila.

Low agricultural productivity, bureaucratic and policy barriers to foreign investment, low quality of basic education, shortage of technical skills, expensive electricity, corruption, and frequent natural calamities are just some of the challenges Villegas mentioned as we strive to realize our rosy pre-pandemic prospects.

Nonetheless, he predicted yearly GDP growth of 6 to 7% in the next years, and maybe 8 to 10% if the appropriate national leadership was chosen in May. He emphasized that the future government should continue tax reforms, ease of doing business, foreign investment openness, and globalization, particularly the ratification of the Regional Cooperation Economic Partnership (RCEP) pact.

It should also continue to increase investment in infrastructure as well as education, which should receive 6 to 8% of GDP in order to raise teacher compensation and use information technology for learning.

Dr. Villegas and another CenSEI forum speaker, former socioeconomic planning secretary Romulo Neri, urged for further support for agriculture, citing the benefits gained by neighboring economies, most recently Vietnam, from increasing agricultural production.

Will the Philippines fulfill the bright potential seen by global economists before the coronavirus sickness of 2019 wreaks havoc on the world’s economy and causes a global pandemic?

As seen in the CenSEI forum video featuring Villegas, Neri, who presented a new development framework for the country; Alan Gepty, head of the Department of Trade and Industry’s Industry Development and Trade Policy Group, who discussed RCEP and other major DTI initiatives; and Philippine Chamber of Commerce and Industry president George Barcelon, who spelled out what business needs to recover from the pandemic (https://www.facebook.com/censeiasia/vi/), the roadmap is

Let’s hope the “presidentiables” and their policy wonks are paying attention and taking notes.

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