The Philippines opens another chapter in its history as a brand-new administration takes over following the national elections in May 2022. As is the case elsewhere, the Covid crisis has scarred the Philippines and its economy. Businesses were severely affected as the country went through prolonged lockdowns to contain the pandemic. For a country with nearly one in four living below the poverty line and where calamities such as typhoons and droughts have made a deep impact, the challenges are indeed daunting.
The new administration faces a gargantuan task to revive the economy. The good news is that the Philippines is known for its resiliency. With a young population, it enjoys a demographic advantage compared to many of its neighbours. In addition, reforms put in place over the past decades have removed some of the bottlenecks in its pursuit of growth.
Economic managers have been prudent in the use of fiscal resources, enabling the country to cope with the demands of the health emergency. Macroeconomic fundamentals remain strong, a crucial factor in attracting international investors. Foreign exchange reserves, which stood at US$108 billion in October 2021, are close to the highest level and represent nearly 11 months’ worth of imports and about 7.8 times the country’s short-term external debt.
Expecting continued economic recovery, the Asian Development Bank raised its growth forecast for the Philippines to 5.1% in 2021 and 6% in 2022. Despite the global uncertainties, remittances from overseas Filipino workers increased last year, helping to stimulate household consumption and bolster foreign currency reserves. The trend is likely to continue as vaccination rollouts in major worker destinations accelerate into 2022.
It is expected that the new administration will remain committed to stepped-up infrastructure investment. In fact, the quality of infrastructure in the Philippines is an overriding concern among foreign investors and will largely determine the level of foreign direct investment in the country going forward. As supply chains continue to shift, the Philippines stand to attract more investments if it vigorously pursues infrastructure development.
Another important trend to watch is digitalization. Businesses are turning to technology to innovate business models, build resiliency, improve customer experience, and increase productivity. With its young, tech-savvy population, the Philippines’ digital adoption is going to be among the fastest in the region. Moreover, a growing number of companies are turning to the capital markets to take advantage of the emerging opportunities. On the sustainability front, the country is undertaking initiatives to participate in the global efforts to combat climate change. It has launched a Sustainable Finance Roadmap and plans to issue its first-ever sovereign green bonds.
The Asset Events Plus presents the 17th Philippine Summit. This high-level event gathers policymakers, game changers and innovators to discuss opportunities and challenges in the country as a new leadership takes over to chart its course in the next six years and beyond. The Summit will tackle the following topics: