Sustaining Philippine economy’s drive towards progress
BusinessWorld forum tackles economic outlook, opportunities for 2024
By Bjorn Biel M. Beltran, Special Features and Content Assistant Editor
The prominent theme for many global economic outlooks produced for 2023 is that while growth is still projected largely within reach into next year, there are a number of persistent risks that may compromise and slow down growth all over the world. Despite this, however, the Philippines, owing to certain factors, have largely bucked the trend.
Such was the sentiment shared by many of the esteemed guests and speakers at the recently concluded BusinessWorld Forecast 2024 forum, which took place on Nov. 22 at the Grand Hyatt Manila in Bonifacio Global City, Taguig.
ADB Country Director for the Philippines Pavit Ramachandran (center) receives token from BusinessWorld Editor-in-Chief Wilfredo G. Reyes (left) and President and CEO Miguel G. Belmonte (right).
In his keynote address on the “Philippines’ Economic Outlook for 2024,” Asian Development Bank (ADB) Country Director for the Philippines Pavit Ramachandran said the country’s economic growth is currently at the “top of the leaderboard” in Southeast Asia.
“The economy has largely remained resilient, notwithstanding global uncertainties, geopolitical tensions, economic headwinds, interest rates, inflation. We’ve seen a very strong rebound in the Philippines, and we’re actually seeing traction in the growth momentum. A lot of this is underpinned by strong macro-fiscal fundamentals; reforms that have been undertaken and have been continued from the previous administration; and the opening up of several strategic sectors like telecommunications, airlines, shipping, and renewables,” Mr. Ramachandran said.
The Philippines’ 5.9% gross domestic product (GDP) growth in the third quarter overtook the growth rates of Vietnam (5.3%), Indonesia (4.9%), and Malaysia (3.3%). The ADB did, however, lower its forecast for Philippine growth this year from 6% in April to 5.7%.
With a 6.2% growth forecast for 2024, the ADB predicts that the Philippines’ economy would develop the fastest in Southeast Asia.
“There’s a real buzz now about the Philippine prospects. Having said all that, I think we do need competitiveness-enhancing and productivity-enhancing investments particularly to nurture the potential demographic dividends here. That’s going to be crucial, and we need to intensify climate action,” Mr. Ramachandran said.
“You can’t really think of medium- to long-term sustainable, inclusive development without addressing some human deficit challenges. There are still lagging regions in the Philippines. 20 of the poorest provinces are still concentrated in Visayas and Mindanao. 60% of GDP growth still comes from Metro Manila, the Southern Tagalog region, and Central Luzon,” he said.
Mr. Ramachandran pointed out that a lot of the country’s growth is still dependent on domestic demand, household consumption and fixed investment both public and private investment in construction, and in the future, the Philippines would need to improve infrastructure competitiveness and enhance productivity and investments to sustain momentum.
Sharing growth
World Bank Country Director for Brunei, Malaysia, Philippines and Thailand Ndiamé Diop (center) receives token from Wilfredo G. Reyes (left) and Miguel G. Belmonte (right) of BusinessWorld.
From the perspective of the World Bank, Country Director for Brunei, Malaysia, Philippines and Thailand Ndiamé Diop said he is optimistic about the country’s growth prospects despite global headwinds. The Philippines, from the international lender’s own data, still remains as one of the fastest-growing economies in the region.
“The good news is that the Philippines really has climbed out of pandemic-induced recession in 2020, and we are quite optimistic about its growth prospects. One of the key reasons is that the structural drivers that are quite favorable despite the headwinds coming from the global economy, and that’s why the economy is quite resilient.”
The headwinds still take their toll, however. The World Bank had reduced its growth forecast for the Philippines to 5.6% in October from the 6% projection it gave in June. It also trimmed its growth forecast for the Philippines to 5.8% for 2024 from 5.9% previously. These are below the government’s 6-7% target for this year and 6.5-8% in 2024.
“Before the pandemic, the world and the Philippines grappled with three long-term challenges: one, building human capital; second, dealing with climate change and natural disasters; and then ensuring inclusive digital transformation,” Mr. Diop said during his address on the theme, “Development Imperatives in a Post-Pandemic World.”
“In this brave new world, what should government do? Essentially, they should have a two-speed strategy. They should deal with immediate shocks, and they should address longer term development challenges that haven’t disappeared,” he added, identifying the need to support and provide safety nets for households struggling with rising costs, manage inflation, and ensuring food supply and security.
“What we think is a key area to focus on and work more towards is to ensure that that growth and the prosperity generated is shared more widely in the Philippines. That every Filipino, wherever you are in the country, [is] connected to that growth prospect and benefit from it. And this what I see as the key challenge for the Philippines going forward. The best way to do it, to make sure that there is equality of opportunity is to build the foundation right now.”
“It will be really important to further enable private investment and innovation to keep growth,” Mr. Diop recommended. “Second is to double down on investment in human capital. Third is to bridge the digital divide and invest in adapting and integrating climate change.”
Sustaining efforts
IMF Resident Representative to the Philippines Ragnar Gudmundsson (center) receives token from BusinessWorld’s Wilfredo G. Reyes (left) and Miguel G. Belmonte (right).
Meanwhile, International Monetary Fund (IMF) Representative to the Philippines Ragnar Gudmundsson echoed the sentiment.
“When considering the global environment, we are seeing currently a global economy that is limping along rather than sprinting. It is in fact slowing down from 3.5% in 2022 to 3% in 2023, and this compared to a growth rate for the world economy that averaged 3.8% during the last two decades, we are clearly seeing a slowdown in the global economy,” he said, addressing the financial stability risks for the Philippines in 2024.
For the Philippines, he pointed out that the government’s infrastructure program, opening up sectors to foreign investments, and private sector participation should help realize a growth potential of about 6.5% over the medium term.
“Boosting the country’s growth potential requires sustained efforts to raise productivity by reducing infrastructure and education gaps while promoting foreign investment,” Mr. Gudmundsson said.
“Sustaining significant growth gains over the past few decades and reaping the benefits of the demographic dividend will depend on further investments to diversify exports, promote the acquisition of new skills, and enhance connectivity across the archipelago,” he said.
According to the IMF, the country should redouble efforts to exit the Financial Action Task Force’s (FATF) “grey list” to further reassure foreign investors and reduce financial transaction risks.
Since June 2021, the Philippines has been included in the global “dirty money” watchdog’s gray list of countries subjected to increased monitoring to prove its progress against money laundering and terrorist financing.
BusinessWorld President and CEO Miguel G. Belmonte
Ultimately, the Philippines must steel itself against disruption to adapt and innovate when the situation calls for it, Miguel G. Belmonte, BusinessWorld president and CEO, said during his opening remarks.
“As we discuss future risks and help one another devise effective strategies for the incoming year, we need strong relationships with all our stakeholders, including customers, suppliers, employees, and regulatory bodies. Nurturing long-term relationships will ensure that our businesses—and our country—remain resilient even in the face of adversity,” he said.
“While the odds may be stacked against us, keeping the economic momentum of the Philippines going requires more than deft hands; it requires us to remain committed to a future of sustainable and inclusive growth that can be enjoyed by all.”
BusinessWorld Editor-in-Chief Wilfredo G. Reyes
Recalling main takeaways from Forecast 2024 in his closing remarks, BusinessWorld Editor-in-Chief Wilfredo G. Reyes highlighted, among others, the importance of keeping an eye on both short-term and long-terms priorities and of factoring in all possible impacts of solutions to issues.
“Addressing urgent concerns should not make us lose sight of what is important to our companies in the next three to five years,” Mr. Reyes stressed.
“Solutions to problems need to be designed and carried out in a wholistic manner, keeping in mind everything else that can be affected in order to minimize unintended consequences,” he added.
Future trends
In addition to the keynotes on the country’s economic outlook, there were also two panel discussions that looked into the prospects of leading industries, namely real estate and energy. In addition, the first fireside chat walked through the opportunities unfolding in the Philippine stock market.
Two other panel discussions, meanwhile, delved into emerging trends in consumer behavior, as well as the seen shift of corporate leadership and workforces towards younger generations, particularly the millennials and Generation Z. Another trend explored in the forum was generative artificial intelligence, which was tackled in the second fireside chat of the forum.
Top 1000 Premium
The forum also served as the venue for introducing BusinessWorld’s latest offering, the Top 1000 Premium. It is a digital platform (accessed via https://top1000.bworldonline.com) that carries up to ten years of data from the country’s leading corporations, conglomerates, and sectors that were previously published on the annual Top 1000 Corporations in the Philippines magazine.
BusinessWorld Executive Vice-President Lucien C. Dy Tioco
“With Top 1000 Premium, users are not just confined to the print editions of Top 1000 in looking for figures and comparing them. Users can now view such data with less hassle, in an interactive and visually appealing manner,” Lucien C. Dy Tioco, executive vice-president of BusinessWorld, shared during the second half of the forum.
“The platform does not just show a rundown of top corporations, top conglomerates, and top sectors in a given year. Top 1000 Premium makes it easier to view how a corporation, a conglomerate, or sector has performed in, say, the previous year, alongside how it performed in previous years. It also allows a corporation’s performance to be viewed in comparison with its competitors in its particular industry,” Mr. Dy Tioco explained.
A one-month free trial of Top 1000 Premium is currently offered to those who will reserve a copy of the upcoming 2023 edition of the Top 1000 Corporations in the Philippines magazine.
BusinessWorld Forecast 2024 was presented by AboitizPower Corp. and Megaworld, with gold sponsors ACEN, Ayala Corp., First Gen Corp., GCash, Globe, National Grid Corporation of the Philippines, Prime Infra, and SM Investments Corp. Silver sponsors BDO, Federal Land NRE Global, Inc., Global Dominion Financing Incorporated, and SM Supermalls; as well as bronze sponsors AppleOne Properties, Inc., EastWest Bank, Meralco, PAGCOR, Pag-IBIG Fund, Robinsons Land Corp., SGV, Toyota Motor Philippines, and Villar City, have also made contributions to the event.
Additionally, the event is supported by the following partner organizations: the Asia Society of the Philippines; the Bank Marketing Association of the Philippines; the British Chamber of Commerce of the Philippines; the French Chamber of Commerce and Industry of the Philippines; Fiera de Manila, Inc.; J. Legaspi Computer Graphics; the Management Association of the Philippines; the Nordic Chamber of Commerce of the Philippines; the Philippine Chamber of Commerce and Industry; the Philippine Franchise Association; and the Philippine Retailers Association. Media partners, including The Philippine Star and One News, also covered the event.