Why the Philippines is Asia’s bright spot

MANILA, Philippines – One number — economic growth of 6.4% in the first quarter — has triggered external groups and media to consider the Philippines as Asia’s poster boy.

The latest is the New York Times, which hailed the Philippines as “Asia’s bright spot,” citing the country’s young population as a primary driver of economic growth.

In an August 27 report entitled “A youthful populace helps make the Philippines an economic bright spot in Asia,” the New York Times cited international analysts who now say the country has gone from being Asia’s “sick man” to the “healthiest” economy in the region.

“A high population growth rate, long considered a hindrance to prosperity, is now often seen as a driving force for economic growth. About 61% of the population in the Philippines is of working age, between 15 and 64. That figure is expected to continue increasing, which is not the case for many of its Asian neighbors, whose populations are aging,” New York Times said.

Other positive signs

The flurry of positive news also helped boost the image of the Philippine economy.

Aside from the 6.4% first quarter growth — which made the Philippines the fastest growing in Southeast Asia — the New York Times article cited other indicators that could show there are fundamental basis for the optimism about the Philippines.

It cited recent credit upgrades that reduce borrowing costs of the government. The Philippines is now one-notch below investment grade.  

The 4-year high record of the peso against the dollar, on the other hand, has been buoyed by remittances, which stayed resilient amid economic woes of host countries.

“The Philippines’ growing prosperity has also been driven by the 9.5 million Filipinos — almost 10% of the population — who work outside the country and who sent home about $20 billion in 2011. That is up from $7.5 billion in 2003,” the article added.

BPOs and growth

The story also cited data the Business Process Outsourcing (BPO) industry, which employs 683,000 Filipinos as of end-2011. The industry generated $11 billion this year, a 24% growth from 2011.

New York Times also shared the government’s plans to generate $25 billion in revenue by 2016 through the local BPO industry.

The report noted how the BPO has given young workers enjoy relatively new economic opportunities, thanks to BPOs that dot business districts in the capital.

“Mika Santos, 18, does not have much to say about the national economy. But she is very happy with her own situation…She earns a comparatively high salary for an entry-level job (handling customer service calls for a United States mobile phone company)…Had she been born a generation earlier, she would most likely have worked as a low-income farmer or gone overseas to find work,” the report highlighted.

These stories from the BPO sector represent those who account less than 1% of the working population and usually describe economic boom in the cities, not in the countryside where poverty is rampant.   

On August 30, the government will announce how the economy performed in the second quarter, and whether the growth is sustainable or not.- Rappler.com