MANILA, Philippines – The Philippines is expected to be among the fastest growing economies in the world between 2010 and 2050, according to a study released by Knight Frank and Citi Private Bank.
In the 2012 Wealth Report, the Philippines is forecast to post a Gross Domestic Product (GDP) growth of 7.3% during the period, making it the 6th fastest growing economy in the world.
The Philippines registered a 7.3% growth in 2010, but slowed down to 3.6% in 2011 as the global economy hit demand for Philippine exports and the government spent less-than-planned on infrastructure projects.
The Philippine government expects the local economy to stay resilient despite the economic challenges of key trading partners in the west. It is targeting a 5% to 6% growth this 2012 — slower than the 2012 Wealth Report’s annual growth forecast.
This 2012 Wealth Report mirrors a study released in January by HSBC, which forecast that the Philippines could become the world’s 16th largest economy by 2050.
HSBC, the multinational British bank, cited demographics and rising education standards to help the Philippines grow by an average of 7% annually over the next 40 years.
The 2012 Wealth Report, on the other hand, cited the “shifting emphasis to the East.”
“The global economy expanded, but the pace of growth was much slower than in 2010. The US economy grew by just 1.8% and GDP in the troubled eurozone rose just 1.6%. In contrast, Asia managed to chalk up economic growth of 7.9%, although even this was down on the 9.5% achieved 12 months earlier,” it said.
“The London School of Economics professor Danny Quah forecasts that by 2050 the world’s economic centre of gravity, a theoretical measure of the focal point of global economic activity based on GDP, will have shifted eastwards to lie somewhere between China and India,” it added. “In 1980 it was in the middle of the Atlantic.”
The report cited an indicator: the growing number of centa-millionaires or those with $100 million or more in assets.
It estimated that there are 18,000 centa-millionaires in the region covering South-East Asia, China and Japan. This is more than North America, which has 17,000, and Western Europe with 14,000. By 2016, this region is expected to have extended its lead, with Ledbury Research estimating 26,000 centa-millionaires, compared with 21,000 in North America and 15,000 in Western Europe.
“These forecasts are influenced by the expected economic performance of countries in the Asia-Pacific region. While rapid GDP growth does not in itself guarantee a sharp rise in HNWIs (high-networth individuals), rapidly growing economies do provide key opportunities for large-scale wealth creation,” the report said.
Citi Private Bank, a wealth management unit of the multinational financial institution, included the Philippines and the other countries in its list of Global Growth Generators – or “3G” countries that over the next 5, 10, 20 and 40 years are expected to deliver high growth and profitable investment opportunities.
Citi included “Bangladesh, Egypt, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam on this [‘3G’] list.”
Not included were Russia and Brazil — two of the so-called BRIC nations alongside China and India — since it said “there are other key countries with promising chances for growth that do not necessarily match the traditional assumptions about where future growth will emanate from.”
“All of these countries are poor today and have decades of catch-up growth to look forward to. Some of them, including Nigeria, Mongolia, Iraq and Indonesia, also have large natural resources that we hope will be more beneficial than they so often have been in the past,” the report said.
Aside from the Philippines, the other two Southeast Asian countries included in the top 10 fastest growing economies between 2010 and 2050 are Vietnam, which ranks 5th and expected to grow by 7.5%, and Indonesia, ranked 8th with average growth of 6.8% between 2010 and 2050.
Citi projected that China will overtake the US to become the world’s largest economy by 2020, which in turn will be overtaken by India in 2050.
Nationality to watch
While Filipinos may not be as important now or in the near future, it is most certainly among the nationalities that should be watched in terms of luxury products and services, including second homes.
The Wealth Report said Filipinos, along with Egyptians, Mongolians, Nigerians, and Vietnamese, are among the nationalities that could be important second home buyers in the future.
The top second home buyers right now are from Russia, Hong Kong, United Kingdom, France, US, Sweden, Germany, China, Singapore, and Canada.
But the nationalities that are growing in importance as primary second home buyers are the Chinese, Indian, Brazilian Malaysian, Norwegian, Kazakhstani, Australian, Indonesian, Turkish, and middle eastern, particularly those from the United Arab Emirates (UAE).
The 2012 Wealth Report pulled together wealth creation, economic risk and politics in the performance of prime residential and commercial property markets, as well as other luxury products.
Citi Private Bank provides products and services to high-net-worth individuals or those who have over US$25 million of investable assets. – Rappler.com