Philippines in a sweet spot

published 1 September 2017

The Philippines is one of the world's fastest-growing economies, and it shows no sign of slowing down. GDP expanded by 6.5% year-on-year in the second quarter of 2017, slightly up on the 6.4% recorded in the January-March period. This is the eighth successive quarter of growth exceeding 6%. The economy is now bigger than Singapore's and Malaysia's. And there is scope for the pace to accelerate.

The government is planning to increase spending on infrastructure to 7.5% of GDP by 2022, up from just 5.2% last year. The extraspending will juice growth in the short term to around 7.5% in 2019, reckons the government and raise the economy's long-term speed limit. A tax reform bill will help pay for the extra spending. It includes a reduction in corporation tax, the closing of expensive loopholes, and higher levies on cars and petrol the latter being "a squeeze on richer Filipinos, given that less than one in ten owns a car", as The Economist points out.

Meanwhile, thanks in part to an English-speaking workforce, the economy has developed a strong foothold in business-process outsourcing, or back-office administration. In just 15 years this sector has mushroomed from nothing to 9% of GDP. Remittances from abroad, worth 10% of GDP, are giving consumption a further fillip.

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The only fly in the ointment is Rodrigo Duterte, the populist president unnerving investors with erratic and counterproductive policies, such as suspending rice imports or scrapping tuition fees. But most of his policies "get watered down or shelved by underlings" before they cause serious upheaval, says The Economist. For now, at least, it's all systems go.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.