The Philippines’ infrastructure binge

The Philippine government has invested heavily in development, sending the stock market to a near-record high

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.

Recommended

I wish I knew what an emerging market was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what an emerging market was, but I’m too embarrassed to ask

This week's “too embarrassed to ask” explains what emerging markets are, and why you might want to invest in them.
9 Sep 2020
Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Beware the hidden risks when investing in emerging markets
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019

Most Popular

Oil producers are back at their Covid-19 lows – is it time to buy?
Oil

Oil producers are back at their Covid-19 lows – is it time to buy?

With demand for oil hammered by Covid-19 and talk of “peak oil demand”, there are lots of good reasons to be bearish on oil producers. So, asks John S…
22 Sep 2020
Why you should stuff your end-of-pandemic portfolio with Chinese stocks
China stockmarkets

Why you should stuff your end-of-pandemic portfolio with Chinese stocks

For an end-of-pandemic portfolio, you need assets that can cope with today’s volatility. And that, says Merryn Somerset Webb, means Chinese stocks.
14 Sep 2020
IAG's share price is ready for take-off - here's how to play it
Trading

IAG's share price is ready for take-off - here's how to play it

The owner of British Airways has had a turbulent year, but is now worth a punt. Matthew Partridge explains the best way to play it.
8 Sep 2020