By Arjay L. Balinbin, Senior Reporter
THE PHILIPPINES is poised to become the 27th largest economy in the world by 2037, as gross domestic product (GDP) growth is expected to average 5% over the next 15 years, a report showed.
In its World Economic League Table (WELT) 2023, the Centre for Economics and Business Research (CEBR) said the Philippine GDP is expected to average 5.3% over the next five years.
“Between 2028 and 2037, CEBR forecasts that the average rate of GDP growth will remain relatively high, at a further 5.0% per annum,” the report said.
CEBR said the strong growth will propel the Philippines to 27th in 2037, from its 38th spot this year.
It noted the Philippines, along with Bangladesh and Vietnam, are some of the economies that will improve its ranking by finding a niche in the global value chain through reforms and boosting labor productivity.
“The Philippines is also projected to continue its growth run in the coming years, fueled by electronics manufacturing, lifting the country from 38th spot in the ranking as of 2022 to 27th by 2037,” the report said.
Among Southeast Asian neighbors, the Philippines will be the fourth-biggest economy by 2037, behind Indonesia (11th), Thailand (25th) and Vietnam (26th) but ahead of Malaysia (35th).
The Philippine economy shrank by 9.6% in 2020 due to the pandemic, but bounced back with a 5.7% growth last year. CEBR gave a 6.5% Philippine growth forecast for 2022, within the government’s 6.5-7.5% target.
“Although GDP is anticipated to have risen relatively strongly in 2022, inflation was also high, at an expected 5.3%. Demand-side policy may be appropriate to bring non-inflationary growth down over the longer term,” it noted.
CEBR said the Philippines has benefited from a tight labor market.
“The high number of people in employment is a key strength for the economy, ensuring that consumer spending can be supported in the short to medium term,” the report said.
In October, the employment rate rose to 95.5%, slightly up from 95% in September and 92.6% in the same month a year ago, as the economy further reopened.
CEBR also noted the Philippines has a moderate level of government debt, with the public sector debt-to-GDP ratio likely to end the year at 59.3%. This is slightly above the 57% as of end-2021.
Sought for comment, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said it is achievable for the Philippines to become the 27th largest economy in the world by 2037.
“Yes, achievable, the foundation of which is the demographic sweet spot/demographic dividend or majority of the country’s 110 million population already at working age,” he said in a phone message.
“The Philippines is one of the last major Asian/ASEAN to reach demographic dividend since 2015: Japan was 50 years earlier, Singapore and Hong Kong in 1980, South Korea in 1985, China in 1980, other ASEAN countries earlier than the Philippines by 10-20 years,” he noted.
When these countries reached the demographic sweet spot, Mr. Ricafort said they experienced strong economic growth of at least 6%-7% over the next 10 or so years.
“The Philippines has been experiencing this since 2015,” he added.
The Philippine population is a major factor in driving economic growth.
“With the world’s 12th largest population at more than 110 million, coupled with the majority of the population already at working age, could lead to increased incomes and spending power that could lead to faster economic growth,” Mr. Ricafort said.
“Provided also that the large population, with an average age of about 25 years old, among the youngest in the region, becomes educated and productive that could also lead to faster economic growth and development; thereby would fundamentally provide the foundation for higher global ranking for the country’s economy,” he added.
Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said the CEBR’s projections “should be taken with a grain of salt because economic and political events in the next fifteen years can still change future outcomes.”
He noted that the next fifteen years cover three Philippine presidents, as well as economic boom-and-bust cycles that can shift various economic policies.
Meanwhile, CEBR said world GDP surged above $100 trillion for the first time in 2022, and is forecast to hit $207 trillion by 2037.
CEBR said China is expected to overtake the United States as the world’s largest economy by 2036.