The Philippine economy is expected to grow by a significant amount by 2030 to become one of the largest in Southeast Asia, supported by a burgeoning middle class and a strong industrial sector.
IHS Global, an internationally-focused publisher and think tank, said that the Philippine government’s business-friendly policies will draw in larger amounts of foreign direct investment (FDI), helping to create more jobs while raising income and consumption.
From now until 2020, economic growth is forecast to average 5.5%. If this rate is able to be sustained further, per capita GDP could double to US$6,000 a year by 2024. By 2029, the size of the economy would more than triple from US$310 billion in 2015 to over US$1 trillion.
“These significant increases in per capita GDP will create one of Asean’s largest consumer markets of the future, as the middle class rapidly expands over time,” explained IHS Global Asia Pacific chief economist Rajiv Biswas.
“This will help attract foreign direct investment by multinationals into the Philippines manufacturing and services industry.” he said.
Look to the Future: The Philippines in 2030
The most important drivers of growth for the Philippine economy are the outsourcing sector and the strong flow of remittances from Filipino workers living abroad. Gains from these activities can be attributed to the large pool of university-educated workers, along with strong English-language skills compared to the rest of ASEAN.
In the Philippines, export revenue from the business process outsourcing (BPO) sector more than doubled between 2008 and 2014, reaching around US$18 billion in revenues in 2014, while the total number of employees in the IT-BPO industry grew to over 1 million.
By next year, the Philippines’ IT-BPO industry is projected to have 1.3 million employees. The fast-paced growth of this sector is also supporting economic development in some of the country’s major metropolitan areas, with Manila and Cebu now listed among the top BPO hubs in the world.
In addition, offshore remittances from Filipino workers abroad grew to a record high of US$26.9 billion in 2014 – up 6.2% from 2013, providing a key source of strength for the Philippines’ balance of payments.
Overseas workers’ remittances directly support consumer spending and residential property construction. It’s estimated that over 10 million Filipinos live abroad and remit payments every month.
Over the long term, the development of the Philippine economy will, along with most other countries in ASEAN, depend on the manufacturing sector’s competitiveness and whether it can successfully attract foreign and domestic investment.
“This will require considerable improvement of the business climate, with the Philippines still ranked very low globally on the World Bank’s ease of doing business rankings,” said Biswas.