openPR Logo
Press release

The Philippines – Asia’s next economic powerhouse?

The Philippines is emerging as one of Asia’s most dynamic economies, with a forecasted growth rate of 6.9 per cent in 2018 driven by investment and private consumption. The economy recorded growth of over 6 per cent in 2017, for the sixth straight year, thanks to buoyant government spending, exports and a recovery in the agricultural sector. Will this Southeast Asian tiger be able to maintain its momentum?

A growing economy

While advanced economies like the United States, Europe and Japan are growing at slow rate, a number of emerging economies like the Philippines continue to surge ahead.

With annual growth expected to reach 6.9 per cent by 2018, the Philippines now ranks as the 10th fastest growing economy globally. Owing to strong domestic demand and government projects, the country’s economy is on the rise.

The government’s expansionary fiscal policy has aided capital formation and credit growth, whereas low inflation has strengthened private consumption.

Path to recovery

The Philippines pursues a growth policy that uses levers like attracting foreign investment, stimulating healthy domestic spending, remittances and infrastructure development.

In spite of numerous political set-backs, the government’s efforts are bearing some fruit. Some pull factors that make the Philippines an attractive destination for investors include:

Tax reform

The Comprehensive Tax Reform Program (CTRP) initiative by the Department of Finance (DOF) in 2017 aims to make the Philippines’ tax environment more competitive against its ASEAN counterparts. For example, personal income tax rates have been lowered.

Tax reforms are projected to add an additional investment of approximately USD4 billion to the Philippines government.

ASEAN integration

The Philippines is part of the ASEAN Economic Community (AEC), along with 9 other countries with a total Gross Domestic Product (GDP) of USD2.5 trillion and economic growth at an average of 5-8 per cent.

Being part of the AEC has enabled Philippine-domiciled businesses to expand into a larger market. The AEC could potentially become what the European Union is today and give a huge boost to the Filipino economy.

Government initiatives

The Philippine Government Common Platform (PGCP) aims to enhance government operations and services by introducing new policies and laws. One of the major transitions included changing the Philippine’s K-10 system to a K-12 system in 2013, in line with International standards.

The government is also set to spend USD180 billion over the next decade in infrastructure spending, so as to fund four new seaports, 32 new bridges and roads, three new bus rapid transit systems, nine new railways as well as six new airports.

Consumer market

Being the second-most populous ASEAN country with 105 million people (after Indonesia), the Philippines is nowadays seen as a promising consumer market by both local and overseas businesses alike.

The average age of a Filipino is 24.6 years – among the lowest globally and even in comparison to most other ASEAN countries. Apart from a young population with a good command of the English language, this youthful population serves as a competitive advantage in the service industry – especially for the Business Process Outsourcing (BPO) industry.

Educated and skilled workforce

Despite a historically strong economy, growth in the education sector has been muted.

Nevertheless, the employment rate in 2018 was estimated to be 95 per cent, one per cent higher than last year. However, out of the total number of unemployment residents, around 22 per cent were college graduates and close to 30 per cent completed junior high school education.

Growth potential

The Philippines is an attractive market for investors. Total Foreign Direct Investment (FDI) inflows for 2017 were valued at USD10 billion.

Key sectors of interest include:


With agriculture contributing to 10 per cent of the country’s GDP, it is now one of The Priority Investment Areas listed in the 2017 Investment Priorities Plan (IPP).

With 10 million hectares of agricultural land in 2017, major exports consist of pineapple, banana, coconut and fishery products.


Often one of the overlooked economic sectors, Filipino manufacturing continues to perform well due to the large yet relatively low-cost, educated labor force.

Expansion of major infrastructure projects and rising domestic consumption are key growth drivers of this sector, which contributes around 25 per cent of GDP as at March 2018.


Tourist arrivals in 2017 reached 6.6 million, up 11 per cent over 2016. The number is expected to hit 7.4 million in 2018 with adventure and sports tourism on the rise.

A major economic contributor in the Philippines, tourism accounts for approximately USD27 billion of GDP in 2017 with a projected growth of about 6 per cent in 2018.

Labor force

Workers in the Philippines are primarily spread across three broad sectors, industry, agriculture and services.

The labor force grew to approximately 71 million in January this year; up from 69 million a year ago. The services sector is where the largest proportion of the population is employed; close to 56 per cent of the total employed persons (as of January 2018).

Offshoring and outsourcing

The BPO sector contributes 9 per cent to the country’s GDP growth (in 2017). With robust growth, the total income for this sector is expected to reach USD40-55 billion by 2020. One of the Philippines’ fastest growing sectors, the BPO industry continues to expand at an annual rate of 20 per cent.

It is set to become the number one source of revenue for the Philippines, outpacing overseas remittances by 2018 and adding over 7 million jobs and revenue worth USD40 billion.

Challenges ahead

The Philippines economy continues to grow despite a drop in its ranking from 99 to 113 for ease of doing business in 2017. Nevertheless the challenges should not be glossed over.

Some obstacles in the way of healthy economic growth include:

Limited ownership

The Philippines restricts foreign ownership in selected industries to protect the market, including utilities and media under a Foreign Investment Negative List (FINL) in 2017.

Although the list is revised every two years, the government plans to reduce limitations to encourage FDI for certain industries which include education, construction, retail trade to name a few.

Low FDI inflow

Net inflow of FDI in mid-2017 fell, largely due to a decline in debt instrument investments from USD407 million to USD105 million, which outweighed net equity capital inflows five-fold.

The Philippines still lags behind for FDI inflows within the Association of Southeast Asian Nations (ASEAN). Even though it has 16 per cent of ASEAN’s population, it hardly receives 8 per cent of ASEAN’s total FDI for 2017 figures.


The Philippines lags behind many neighbouring countries in terms of better infrastructure development. Poor transport facilities hinder economic development and utilities provision.

Metro Manila suffers from congestion in terms of air, road and sea traffic as one of the most densely populated cities in the world.

The World Economic Forum’s Global Competitiveness Index currently places the nation in the 90th position in terms of infrastructure ranking, which undermines its ability to compete globally.


The Philippines ranked 111th out of 180 countries in the Corruption Perceptions Index (CPI) for 2017, lower than the previous two years.

Although the government established a Presidential Anti-Corruption Commission earlier this year with a hotline for citizens’ complaints among other government initiatives, more comprehensive efforts are clearly needed to curb the scourge of corruption.

Political uncertainties

In 2017, Philippine was ranked 12th globally in terms of impact due to terrorism. Although an ideal holiday destination, Western countries are wary about doing businesses and investing due to the perception of continuing instability on the security front, thus limiting economic growth.

Tackling poverty

22 million Filipinos in 2015 still live below the national poverty line – more than one-fifth of the population. Two out of five families that are poor live in Mindanao, where public investment could boost prospects for better jobs.

As jobs in rural areas are scarce, a third of Filipinos survive on fishing or farming, industries in which productivity and hence wages are very low. Most do not have the money to move to Manila for better prospects, nor do they speak the national language let alone English.

Future outlook

Barring significant global political and economic shocks, the Philippines’ economy appears well-positioned for a continuous year of steady growth in 2018.

The tourism industry is becoming the third growth engine in the service sector, after remittances from overseas BPO-IT sector services. However, political uncertainty and terrorism cloud the prospects for economic growth.

Development in agriculture, an increase in the rate of employment, sustained inflow of remittances and lower inflation rates would likely bring down the poverty rate in the next few years.

Nonetheless, the Philippine Development Plan (PDP), introduced to cover the years from 2017 to 2022, aims to reduce poverty from about 22 per cent in 2016 to 14 per cent by 2020. Raising the country’s standard of living is the main goal of the PDP.

Moreover, the latest tax reforms, Philippine’s participation in AEC and various government initiatives are paving the way for it to become Asia’s next economic powerhouse.

As the Philippines’ government and elite are seized of the need to reform and have demonstrated significant progress in that direction, prospects for the country’s economy are positive, building on the nation’s natural demographic and economic advantages. Savvy investors would do well to give the Philippines a second look.

Spire Research and Consulting was established in 2000 to address a gap in the research and consulting industry in global emerging markets. Unlike most agencies that focus on traditional consumer research, our founders saw a profound need for holistic research projects.

These projects integrate traditional customer research with knowledge of the broader business eco-system; for instance, competitors, channels, legal and regulatory factors. They support strategic decision-making for market growth and entry. Our studies provide indispensable tools for creating business plans, setting sales quotas, quantifying budgets and investment as well as making product launch decisions.

Spire exists to undertake such projects with distinction.

Unit 501-502, DLF City Court,
DLF Phase III, Sector 24, Gurugram – 122002, India

Telephone: (91) 124 421 6144
Fax: (91) 124 422 1934

This release was published on openPR.

Permanent link to this press release:

Please set a link in the press area of your homepage to this press release on openPR. openPR disclaims liability for any content contained in this release.

You can edit or delete your press release The Philippines – Asia’s next economic powerhouse? here

News-ID: 1321317 • Views: 246

More Releases from Spire Research and Consulting

Spire speaks on Cloud computing and IoT at the GATES Indonesia ICT Channel Summi …
Spire was honored to participate in the GATES Indonesia ICT Channel Summit, 2019 as Research Partner. The Summit was held on 18-20 June, in Bali. Albertus Edy Rianto, Senior Manager and Astri Welmien Tompodung, Senior Consultant, Spire Indonesia, shared their insights on the rise of Cloud computing and the internet of things (IoT) in Indonesia's business landscape. The speakers discussed how, through the continued technological advancement, ICT is becoming a general
Will compost turn out to be the magic mineral for African agriculture?
Introducing phosphorous back in African soil is important as it helps plants in early life to build root systems. 80 per cent of phosphate reserves are controlled by five countries. Morocco has 75 per cent of the global reserves. After an 800 per cent price hike in 2008, phosphate rock has become costly. An alternative option is compost. Compost not only provides phosphorous and other nutrients but can also restore the soil
Digital banking in Singapore
What will be the impact of digital banks in Singapore? Leon Perera, Chief Executive Officer of Spire Research and Consulting, shared his insights in Business Times – Singapore. More and more countries worldwide are issuing full bank licenses to digital-only banks. The competition from digital banks is being seen as a favorable development for the consumer. Digital banks with fewer physical branches and Automated Teller Machines to maintain could incur lower costs
Spire talks about political risks facing business in ASEAN
On 25th April, Spire, Yamada Consulting Group (YCG) and SPEEDA jointly organized a breakfast seminar in Singapore to share insights about the political risks that businesses face in ASEAN in a year of multiple elections. The panelists were Leon Perera, Chief Executive Officer of Spire Research and Consulting, MS. Khor YU Leng, Research Director, Southeast Asia Segi Enam Advisors Pte. Ltd and Mr. Takashi Kawabata, Lead Asia Economist, Uzabase Asia

All 5 Releases

More Releases for Philippine

European investors are interested in investing in Philippine loans
Since the integration with the Philippine loan originator in December 2018, the European P2P platform has funded €2.4 million of Philippine loans. This is the highest volume of financed loans among all loan originators of Robocash Group for the first 3 months after the integration with the P2P platform. The first loan originator of Robocash Group in Southeast Asia, Robocash Finance Corp. integrated with the P2P platform in
Sofitel Philippine Plaza Manila won several awards spanning various categories in the recently concluded Philippine Culinary Cup 2018 (PCC). Held at the SMX Convention Center last August 1 – 4, 2018, Sofitel Philippine Plaza Manila’s master chefs secured multiple awards in the PCC’s Professional Division. Led by Executive Chef Nicholas Shadbolt and under the instruction of team leaders Chinese Chef Michale Tai and Sous Chef Regine Lee, the Sofitel culinary makes waves with sweet hotel deals for Philippine surfing, Asia’s leading hotel booking site and part of Nasdaq-listed Priceline Group (Nasdaq: PCLN), is providing hotel deals in the Philippine province of Surigao del Norte, a popular tourist destination offering constant balmy temperatures, swaying palm trees, and the famed Siargao Island, one of the world’s best surfing locations. Recently included on list of destinations to watch in 2013 by Condé Nast Traveller magazine, Siargao Island’s reputation is well-deserved due to
Paperless Trail Announces 2011 Q4 Release for Philippine GPS Maps
October 2011, Makati, Philippines – Paperless Trail Inc (PTI), recently announced the 2011 Q4 release of updates for the company’s detailed Philippine GPS Maps. PTI has developed complete GPS maps of the Philippines to support its various mapping products and services, including support for Garmin navigation devices. The maps feature detailed coverage from regional down to street level, and include all major roads, toll ways, national highways, and ferry routes. With
Sourcing Destination Snapshot: The Emerging Philippine Value Proposition
“The Philippines offers many opportunities as an offshore sourcing destination as well as being well positioned as a regional hub for Asia Pacific.” - Ralph Schonenbach (CEO, Trestle Group) In designing sourcing models, IT and BPO decision-makers literally have a “world” to choose from when it comes to competitive country locations. The unique needs of a business will clearly drive managers to seek out sites capable of satisfying a range
YesStyle proudly co-presents the 2nd Philippine K-pop Convention
Leading online fashion retailer YesStyle served as co-presenter of the 2nd Philippine K-pop Convention held December 11, 2010 at the Philippine International Convention Center in Manila, Philippines. Organized by the Philippine K-pop Committee, Inc. (KPCI), the first and only non-profit K-pop organization in the country, the event was attended by over 5,000 Filipino K-pop fans from the Metro Manila area and surrounding cities. Themed as "2010: The Year of K-pop", the