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Charlemagne’s Gems: Philippines - from basket case to global star
by Julian Mayo on Sep 26, 2013 at 14:17
The emergence of the Philippines from a basket case to a rapidly growing economy has been an uneven one, but impressive nonetheless.
Our first visit was way back in 1986, a few months after the arch crony-capitalist President Marcos and his shoe-loving wife Imelda were forced into ignominious exile as a result of the People Power revolution.
Its capital Manila was then very poor, rather dangerous and clearly needed a lot of investment, one indicator being that the city possessed one of the world’s least welcoming international airports. The incoming president, Corazon Aquino, clearly had a job on her hands.
Fast forward to 2013 and how is the country now?
For starters, it’s one of the fastest growing economies in the world. For the eight years to this year, a period covering the global recession, GDP growth will have grown in real terms by more than 5% per annum, and recently this has risen to above 7%.
The rate of investment is now above 20% of GDP – not high, but coming up on a par with countries such as Malaysia and Thailand.
To sustain real GDP growth above 7%, growth in investments should remain well above that of GDP as a whole and this requires improved policy execution.
The government’s Private Public Partnership programme will be needed to achieve this. This programme encompasses infrastructure such as railways and highways, including one from the abovementioned airport to the city.
The country is supported by strong finances.
It has a small primary fiscal surplus, gross government debt to GDP has fallen steadily to around 50% of GDP and official foreign exchange reserves have grown from $33 billion to $85 billion in the last five years, with liquidity helped by overseas worker remittances.
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