PHL growth seen to slow further, trail regional peers
The Philippines’s average economic growth rate could slow further to between 4 and 5 percent in the next 10 years, according to a report released by Bain & Company and Monk’s Hill Ventures’ Angsana Council.
The report said the country’s growth was higher at 6.6 percent between 2011 and 2019 but declined to 4.8 percent between 2011 and 2021.
This slowing trend is expected to continue given that the country’s development constraints continue to make it difficult to do business in the Philippines.
“[The Philippines has] shown steady improvement over the last two decades, but the ability to do business always lags the potential of its educated and dynamic population,” the report stated.
The think tank said Philippine growth in the next 30 years is around 3.4 percent. This is the second lowest average growth in the Asean-5 for the period.
The fastest growth will be registered by Vietnam 6.7 percent followed by Singapore at 4.4 percent; Malaysia, 4.2 percent; and Indonesia, 3.6 percent. Thailand will post the slowest growth at an average of 2.8 percent in the next three decades.
Further, GDP per capita in the Philippines will also see the lowest compounded annual growth rate (CAGR) in the next three decades at only 1.9 percent. This will be slower than the 2.3 percent posted between 1991 and 2020.
“Looking back at the six leading economies in Southeast Asia, we see three broad outcomes in terms of GDP per capita: Vietnam outperforming; Malaysia, Indonesia, Thailand, and Singapore performing at about the same rate; and the Philippines underperforming,” the report stated.
The Southeast Asian economy, it added, is forecasted to grow by 4-5 percent annually over the next 10 years, with Vietnam leading the charge at a projected growth of 5-7 percent.
While many economists have correctly focused on the progrowth policies, stable macroeconomics and healthy demographics of Southeast Asia, they are often missing two critical sources of additional growth.
These are the growing impact of tech-enabled entrepreneurs on investment, productivity and economic inclusion; and that SE Asia’s largest trading relationships are with China—as China grows, SE Asia grows.
“Contrary to conventional wisdom that SE Asia benefits most from businesses diversifying away from China, SE Asia benefits most from a growing Chinese economy,” the think tank said.
The think tank said the greatest force of progress in most developing countries are tech-enabled disruptors (TEDs) which are directly and indirectly impacting six of the seven traditional growth drivers by promoting business creation, enabling healthy competition, raising investment, strengthening e-government, improving education and productivity levels, and improving infrastructure.
Pressure from TEDs is forcing traditional family-controlled or “national champions” to increase investment levels and accelerate innovation or face irrelevance in the coming decade.
Bain & Company and Monk’s Hill Ventures’ Angsana Council said most Southeast Asian governments actively nurture the growth of TEDs with beneficial policies, regulations, and infrastructure building in areas critical to tech-enabled disruption.
Another advantage of SEA is the demographic dividend expected from the size and growth of its working-age population. In 2022, China’s population tipped into absolute decline.
The Asean has the largest cohort of children relative to total population among the emerging regions under review.
Middle-class consumerism is expected to rise given a youthful population that needs to spend on lifestyle, education, housing, and other needs well into the 2030s, while Latin America and Eastern Europe’s populations will begin to contract.
Source: Business Mirror