The Philippines’ infrastructure binge

After years of being dismissed as a regional laggard, the Philippine economy is starting to motor. GDP growth came in at 7.2% last year, and should reach 7% this year. Credit-ratings agency Standard & Poor’s now deems the country’s public debt a safer bet than India’s or Brazil’s.

Political stability and improved governance have been the key factors behind the upswing. A peace deal with Muslim secessionists was reached last year.

A clampdown on corruption, and reform of the internal revenue service, has improved the public finances, while inflation is under control. Public debt has fallen from 70% to around 40% in the past decade.

All this has helped the well-educated workforce continue to build a presence in high-tech manufacturing. The young population implies plenty of scope for consumption to climb over the long run. The improving outlook has encouraged a threefold jump in foreign direct investment over the past four years. But it is still relatively low at 1.4% of GDP.

To encourage more, and underpin further development, the government has gone on “an infrastructure binge”, says The Economist – 57 projects are in the pipeline and next year’s budget allots 4% of GDP to the task.

The Philippines still has much to do, especially on corruption and red tape. But it is going in the right direction. No wonder the Stock Exchange index has risen 18% this year to a near-record high.

• Stay up to date with MoneyWeek: Follow us on TwitterFacebook and Google+

FREE daily investment email from MoneyWeek
Receive our thought-provoking investment email Money Morning every weekday morning, plus occasional promotions, & become a smarter investor.

Please enter a valid email address

To sign up, enter your email address:

MoneyWeek magazine

Latest issue:

Magazine cover
What a farce!

John Stepek on surviving the Greek fallout

The UK's best-selling financial magazine. Take a FREE trial today.
Claim 4 FREE Issues

From ADRs to Z scores – all the terms you wish you understood, but were too embarrassed to ask about.

Gervais Williams: if you want real dividend growth, buy small-cap stocks

Merryn Somerset Webb interviews small-cap stock expert Gervais Williams about how penny shares outperform blue chips 'again and again'.


Which investment platform is the right one for you?

When it comes to buying shares and funds, there are several investment platforms and brokers to choose from, with varying fees and charges. Find out which is best for you.


1 July 1972: Britain's first Gay Pride march is held 


On this day in 1972, the Gay Liberation Front organised Britain's first Gay Pride march from Trafalgar Square to Hyde Park.


Anatomy of a Grexit: how Greece would go about leaving the euro

Jonathan Loynes and Jennifer McKeown, economists at Capital Economics, look at the key issues and challenges of a Grexit, how it might be best managed, and set out a timetable for change.