Macroeconomic Overview of the Philippines and the New Industrial Policy

Abstract

The Philippine economy has been posting outstanding growth and gaining momentum in recent years. Having consistently high GDP growth rate at 6-7% in the past years, the Philippines is among the fastest growing economies in Asia. This is a big turnaround from its dismal performance in past decades of boom-and-bust cycle which has left the country behind, vastly outperformed by its Asian neighbors. From being the so-called “sick man of Asia,” the country has become a consistent major performer in the region. The prospects for the economy remains very optimistic as the country garnered positive investment, credit and competitiveness ratings and growth projections from investment grade and credit rating agencies – Moody’s, Fitch, and Standard and Poor (PDP 2017-2022). More recently, the Philippines received another upgrade from Fitch, placing it ahead of Indonesia, in anticipation of a strengthened fiscal outlook with the passing of the tax reform package. In the World Economic Forum’s Global Competitiveness Report 2017, the Philippines ranked 56th out of 137 economies and performed well in several areas including macroeconomic environment, inflation management (no.1), government debt and budget balance-both as percentage of GDP, soundness of banks, regulation of securities exchanges, primary and higher education, among others. International organizations such as the Asian Development Bank, International Monetary Fund and World Bank have projected that the Philippine economy will experience continued robust growth in 2017-2019.4 In sustaining the strong economy and realizing the growth projections, continued sound performance of growth drivers and government policies to support them are crucial.