The Philippines will be a trillion dollar club member
The economy of the Philippines is the world’s 28th largest economy by GDP (Purchasing Power Parity) according to the 2018 estimate of the International Monetary Fund. Under the administration of President Rodrigo Duterte, the Philippines recorded a GDP (PPP) of P956 billion in 2018. If the Philippines is able to maintain its projected GDP Growth of 6.5 percent in the next decade, then the tiger cub economy might well be part of the trillion dollar club, which currently includes the United States, China, India, Japan, Germany, Russia, Indonesia, Brazil, the United Kingdom, France, Mexico, Italy, Turkey, Korea, Spain, Saudi Arabia, and Canada.
In a report titled “Philippines Tiger Economy Still Set for Dynamic Growth,” IHS Markit Asia-Pacific chief economist Rajiv Biswas predicts that in 2022, the country will reach the upper middle-income status as robust economic growth trickles down to household incomes. It noted that the Philippine economy is poised to double by 2026 en route to a GDP of USD 1 trillion by 2032.
The trickling-down effect seems to have started already. According to the Philippine Statistics Authority (PSA), poverty incidence among Filipinos has decreased by 6.6 percentage points, from 27.6 percent during the first half of 2015. to 21 percent during the first half of 2018.
In a report of the National Economic and Development Authority (NEDA), it noted that the average income has accelerated from 15.3 percent to 21.2 percent. According to NEDA Undersecretary Adoracion Navarro, the growth in per capita income of the bottom 30 percent of households picked up significantly to 29.2 percent in the 2015-2018 period from only 20.6 percent in the 2012-2015 period. This implies an increase in real incomes of the poor, which has helped in reducing poverty among Filipino families and individuals.
Highest credit rating
The World Economic Forum also noted the Philippines as among economies that show potential on Intergenerational Equity and Sustainability. In April 2021, the country also received its highest credit rating from international debt watcher S&P Global Ratings. S&P upgraded the Philippines’ long-term sovereign credit rating from “BBB” to “BBB+” — two notches above investment grade rating — with a “stable” outlook.While IMF had previously cautioned about the rising inflation in 2018 as a possible roadblock, this problem seems to no longer be an issue today. In fact, Asian Development Bank predicted inflationto decline at 3.8 percent in 2019 and 3.5 percent in 2020. It also forecast per capita GDP Growth to rise at 4.8 percent in 2019 and 2020.
Scaling up public investment
In its economic assessment published in 2018, IMF highlighted the need to scale up public investment in the Philippines if it were to sustain long-term growth and reduce poverty. It said that public investment, if well managed and targeted, could help boost overall productivity, stimulate private investment, and reduce poverty by creating jobs. According to the IMF Investment and Capital Stock Dataset, the Philippines was only spending 3.9 percent of its GDP on public investment in 2015. This is far lower when compared to neighboring countries like China (13.5%), Malaysia (9.2%), Vietnam (6.9%), Thailand (6.2%), and India (5.9%).
Build, Build, Build
The “Build, Build, Build” program is the Duterte administration’s medium-term goal to increase infrastructure spending
from 5.4 percent of the country’s Gross Domestic Product (GDP) in 2017, to 7.3 percent by the end of 2022. This is higher than the 2.4 percent average recorded by the past six administrations in the last five decades — and the highest budget allocation for infrastructure in Philippine history.Since then, 6.5 millions jobs have been created to build 29,264 kilometers of roads, 5950 bridges, 11,340 flood control projects, 214 airport projects, and 451 commercial and social seaports.
One of the landmark projects of Build, Build, Build is the Mega Bridge Program, a masterplan which lays the foundation for a series of short and long-span bridges linking island provinces to eventually connect Mindanao and Visayas to Luzon via land travel.According to DPWH Secretary Villar, the first project under the master plan, the Panguil Bay Bridge, a 3.7-kilometer bridge connecting Tangub City in Misamis Occidental and Tubod in Lanao del Norte, already started in November 2018.Once completed in 2023, travel time between Tangub and Tubod will be reduced from 2.5 hours to only 10 minutes.
It will also shorten travel time between Ozamiz City in Misamis Occidental and Mukas, Kolambugan, in Lanao del Norte from 2.5 hours (using RORO operations) to only 20 minutes. Detailed engineering designs of the Guicam Bridge in Zamboanga Sibugay and three bridges in Tawi-Tawi (Nalil-Sikkiat Bridge, Tongsinah-Paniongan Bridge, and MalassaLupa Pula Bridge) are also included in the Improving Growth Corridors in Mindanao Road Sector Project (IGCMRSP) under the Asian Development Bank.
Six bridges are now undergoing feasibility studies: (1) the Bohol – Leyte Link Bridge, a 22-kilometer bridge, which will shorten travel time from Bohol and Leyte provinces from three hours to only 40 minutes, (2) the Negros – Cebu Link Bridge, a 5.5-kilometer bridge that will reduce travel time from Negros and Cebu from 40 minutes to ten minutes, (3) the Cebu-Bohol Link Bridge, a 24.5-kilometer bridge that will reduce travel time from two hours and ten minutes to only 30 minutes, (4) theLuzon Sorsogon Samar Bridge Link Bridge, an 18.2-kilometer bridge connecting the island of Samar in Eastern Visayas to the main island of Allen-Matnog, (5) the Samal Island- Davao City Connector Bridge, a 2.85-kilometer bridge connecting Samal Circumferential Road to Davao City, and (6) the Bataan-Cavite Interlink Bridge, a 31-kilometer inter-island bridge connecting Mariveles in Bataan to Corregidor to Naic in Cavite.