The Philippine economy showed brighter performance in 2012. With 4Q12 GDP growth of 6.8 percent, its full-year growth was 6.6 percent, higher than the 5-6 percent target set by the government. Key contributors included 1) rising domestic consumption; 2) expansion in public infrastructure projects; and, 3) improving exports.
Rising consumption in the Philippines could be attributed to higher disposable incomes in line with rapid growth in their service sector, particularly business process outsourcing (BPO), e.g., call center services, etc. Among the Philippine strengths are highly-educated workers with good English proficiency, plus lower wages than found in western countries.
Flourishing public infrastructure projects: Given the Philippine government's policy toward the development of infrastructure, education and public health,
its public spending expanded 11.8 percent in 2012, being the main thrust for economic growth. In continuing with these policies, the government has allocated PHP2.006 trillion for 2013, up from PHP1.816 trillion in 2012. The expenditures will be used for infrastructural systems and social services such as education and public health. Higher expenditures will also be set aside for
infrastructure projects undertaken as public-private partnerships (PPP) [1], per the Philippine Development Plan 2011-2016.
Improving exports: Despite a falling value in electronic product exports last year due to lower demand amid global economic uncertainties and the Philippine Peso's appreciation, its 2012 outward trade grew 7.6 percent overall YoY, due mainly to shipments of tropical vegetables and fruit, food, wooden furniture and petroleum. Key destinations included China, Japan and the US.
Despite its chronic unemployment of 6.8 percent, the Philippines' economic potential makes it one of the most attractive investment destinations within ASEAN. Bright prospects are apparently in store for them in real estate, food, consumer goods and tourism-related business. For 2013, KResearch projects that their economic growth may reach 6.3-6.6 percent. – KResearch
[1] PPP involves projects wherein the private sector participates with the public sector in the construction, development and management of basic infrastructure, as well as related services for the general public.
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