December 13, 2018

The Philippines will move up to become the 18th biggest economy in the world by 2037, partly to be boosted by a continuously growing labour force population, according to London-based Capital Economics.

In its Long-Term Global Economic Outlook 2019 report last week, Capital Economics projected the Philippines would have a nominal gross domestic product (GDP) of $1.414 trillion by 2037, just behind the economies of the United States, China, India, Japan, Germany, the United Kingdom, France, Mexico, South Korea, Brazil, Canada, Australia, Italy, Indonesia, Russia, Nigeria and Saudi Arabia by that time.

Ranked 25th in terms of nominal GDP in 2017, the Philippines will overtake Turkey, Poland, Thailand, the United Arab Emirates, Colombia, South Africa and Argentina two decades from now, based on Capital Economics’ projections.

The Philippines had enjoyed uninterrupted growth in the past quarters, thanks to benign inflation in the previous years that had given the central bank enough room to keep interest rates low.

The formation and creation of employment and new business organizations will make individuals profitable. It is likely that on account of the Philippines one of the bases for the Philippine report is the development got from the occupation of Filipinos abroad and additionally employment produced by the business process outsourcing industry in the nation, as these are two dollars pay workers that as of now push the Philippine economy.

The Philippines is expected to grow at such a rapid pace that they will become more prosperous than 27 countries over the next few decades, jumping from its current spot to become the 18th richest country on Earth.

Across South and Southeast Asia, Capital Economics described the economic outlook over the coming decades as “brighter.”

“Thailand is the only one among these countries where the working-age population is forecast to contract. Meanwhile, the working-age populations will still grow at a rapid pace in countries such as the Philippines, Malaysia, and India,” it said.

By 2037, the Philippines’ nominal GDP per capita would be $10,437 as the country’s population is expected to balloon to 129 million from 102 million last year.

For the period 2018 to 2022, Capital Economics expects the Philippines’ GDP growth to average 6 percent, below the government’s medium-term target range of 7-8 percent.

From 2023 to 2027, real GDP growth will sustain an average 6% growth, before slowing to 5.5 percent in 2028-2037, Capital Economics’ forecasts showed.

Average inflation for 2018-2022 is seen at 4.5 percent—above the 2-4% target range—before easing to 3.5 percent in 2023-2027 and 3 percent in 2028-2037.

However, the long-term prospect for the Philippines’ future development will depend on its ability to make the manufacturing sector more competitive and to attract foreign and domestic investments in manufacturing.

This will require a lot of improvement in the business climate, with the Philippines still ranked very low globally on the World Bank’s Ease of Doing Business rankings.

The Philippines also faces challenges such as “very high” poverty and unemployment incidence.

However, to have a sustained rapid growth will require continued economic reforms to improve the business climate of the Philippines, making it more attractive for foreign direct investment into sectors such as manufacturing and tourism.