June 17, 2014

Long Term Growth Perspective: Where is the Philippines Today?


All throughout the year, most of the economic analyses have focused on short term GDP growth perspective of the country. Significant GDP growths were recorded in the last 2 years; 7.2% and 6.8% were recorded in 2013 and 2012 respectively.  There is no doubt that, in the short term, Philippines economic growth is on high level. Yet, looking into the long term side, where is the Philippines?

The 10 years average GDP growth rate, from 2003 to 2012, suggests that Philippines is catching up on the race.  The graph above shows the five (5) members of Association of Southeast Asian Nations (ASEAN) – Indonesia, Malaysia, Singapore, Thailand and Philippines – with there 10 years average growth rate. From 1993 to 2002, there was a huge gap between Singapore-Malaysia versus other ASEAN regions; Singapore and Malaysia average GDP growth was already in the 6% level while other regions were only in 4% level.  From 2003 to 2012, it was observed that the gap between ASEAN regions narrowed to more or less than 1%. Clearly, there was a catching up along the story.

There were two countries that significantly exemplified changed in average growth. Indonesia's 1993-2002 average growth of 3.63% increased to 5.69% in 2003-2012. Relatively, Philippines average growth increased from 3.57% to 5.17% from year 1993-2002 to year 2003-2012 respectively. Singapore, Malaysia, and Thailand posted negative and insignificant change in growth.

The numerical figures simply says that even though the Philippines has significantly exemplified high level of growth rates in the past two (2) years, in the long run perspective, the country is just starting up to grow; or in other words, the country has just recovered from past economic woes.  Yet, it cannot be discounted that the country has bright future potential.  

Philippines first quarter (Q1) growth in 2014 was recorded at 5.7% (Source: National Statistics Coordination Board). World Bank's GDP forecast for the Philippines is 6.6%, 6.9%, and 6.5% in 2014, 2015, and 2016 respectively.

Philippine Economist 2014 GDP growth forecast for the Philippines is 6.5% - 7%.   

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