Recent Philippine economic performance has been phenomenal,
driven by a dominant services sector. Last year, the country’s gross domestic
product (GDP) grew by 7.2 percent, outpacing the previous year despite the
devastation caused by Typhoon “Haiyan” and other natural disasters. Services,
which account for nearly 60 percent of GDP, grew by 7.1 percent; industry
expanded by 9.5 percent. Agriculture, meanwhile, managed to grow by 1.1
percent. On the demand side, growth in household and government consumption
slowed down to 5.6 percent and 8.6 percent, respectively, while capital
formation jumped by 18.2 percent. For 2014, our think tank, the Philippine
Institute for Development Studies, forecasts Philippine GDP to grow by 6.6
percent (Navarro and Llanto 2012).
Compared with neighboring countries, the Philippines equaled
or outpaced China in the first two quarters of 2013, and grew faster than
Indonesia, Malaysia, Thailand, and Vietnam in all four quarters of last year.
There has been a lot of good news in the Philippines
recently. Better governance as shown, for instance, by improved fiscal health,
has earned successive sovereign credit rating upgrades for a country once known
as Asia’s basket case. One year after getting investment-grade status, the
Philippines was again given an upgrade by S&P, which said the latest action
was due to its belief that “ongoing reforms to address shortcomings in
structural, administrative, institutional, and governance areas will endure
beyond the current administration” (Batino and Yap 2014).
