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.