Philippine potential cited
Louella D. Desiderio
A COMBINATION of sustained fast economic expansion and a young population makes the Philippines one of 11 countries with highest growth potential in the 21st century, global financial services firm Citigroup said.
Citigroup Global Markets, Citi’s brokerage and securities arm, in a Feb. 21 report, titled: "Global Growth Generators: Moving beyond Emerging Markets and BRIC," included the Philippines in its "3G" or "global growth generators" grouping.
These are countries that, based on its assessment, are expected to deliver high growth and profitable investment opportunities over the next 40 years.
"In our view, the countries that are most promising in terms of their growth potential are Bangladesh, China, Egypt, India, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam," Citi said.
These countries performed well on its 3G index, which is the weighted average of six growth drivers, namely: domestic saving or investment, demographic prospects, health, education, quality of institutions and policies, and trade openness.
The Philippines got a score of 0.60, which was higher than Nigeria’s 0.25, Sri Lanka’s 0.33, Egypt’s 0.37, Bangladesh’s 0.39 and Iraq’s 0.58. But it was still less than Mongolia’s 0.63, Indonesia’s 0.70, India’s 0.71, China’s 0.81 and Vietnam’s 0.86.
The report did not provide the score the Philippines got per growth driver but noted that "investment in education and health should help it improve its score and its growth prospects, while institutional quality, which also pulled down its 3G index score, should be raised next."
Citi expects the Philippines to grow by an average of 5.5% from 2010 to 2050, the same growth rate projected for Sri Lanka.
This is faster than the projected 5% growth rate for Egypt and China, though slower than the 5.6% seen for Indonesia, 6.1% for Iraq, 6.3% for Bangladesh and Mongolia, 6.4% for Vietnam and India and 6.9% for Nigeria.
Citi said it expects the Philippines’ population to grow from 93.6 million last year to 146.2 million 2050, with the population of working-age people rising by 66.2% over that period.
Aside from the need to raise its investments in education and health, Citi said the country’s investment rate -- "unbelievably" low at 14.5% of gross domestic product (GDP) for 2006-2009 -- should be raised for the growth projection to materialize.
Governance and institutional reform should also be carried out if the country were to become one of the Asian tigers.
But working in its favor, "the Philippines has a widely dispersed diaspora sending home remittances and establishing personal, professional and commercial contracts, links and networks that will benefit the country in the future," Citi noted.
The Philippines posted a 34-year-high growth rate of 7.3% last year, topping the government’s 5%-6% target. For this year, the government has set a higher growth goal of 7%-8%.
University of the Philippines economist Benjamin E. Diokno said via text that a 5.5% average GDP growth for the next 40 years will not be much of an improvement "if the quality of growth is the same as the one we’ve experienced in the last 10 years and if population grows at 2.25%."
Citi said its 3G methodology presents a new way of viewing countries, regions, cities, sectors or industries, pointing out that the usual approaches have failed to identify sources of global growth and investment opportunities.
Citi said it sees strong global growth until 2050, with an annual average of 4.6% until 2030 and 3.8% until 2050. Developing Asia and Africa will be the fastest growing regions until 2050, driven by population and income growth. "We forecast Developing Asia will grow by 7% between 2010 and 2030 and by 5.6% between 2010 and 2050, accounting for 55% and 54% of total world GDP growth over these two periods," it said.
The Philippines also forms part of Goldman Sachs’ Next Eleven countries, along with Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, South Korea, Turkey and Vietnam.
Thursday, 24 February 2011
Philippine potential cited