Manila Standard Today
Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. stirred the interest of his audience when he declared before an investors’ forum last week that the Philippines would soon near the demographic window in which a greater number of the population would drive economic growth.
Tetangco sees 2015 as the demographic “sweet spot” where the Philippine population will have increased its purchasing power and push the economy to grow much faster.
“That concept, the demographic window, is that period in an economy’s history when more people or a prominent portion of the population is of working age. That means these people have the purchasing power, the purchasing capacity, which can drive consumption, investment and therefore [result in] faster economy,” Tetangco said. “The population would be a source of economic growth.”
Tetangco is clearly referring to the demographic transition of the Philippines, when the younger age groups are about to comprise a much larger proportion of the country’s total population, and cited history to prove the concept of demographic dividends. Some economists actually credited the demographic dividends to the rise of Asia’s tiger economies in the 70s and 80s.
“Our average age is 22.2 years. So by 2015, we’ll reach that window. We’ve seen the experience of other countries—Thailand and Indonesia—in the region that have benefited from these demographic dividends,” Tetangco said. The Philippines, he said, was the last major economy in Asia to enter the so-called sweet spot. “If you’re an investor and you’re looking at the potential of an economy in terms of the size of the market, they will consider these demographic window that the Philippines is about to enter,” Tetangco said.
The over-half-a-million Filipinos working in various business process outsourcing sites in the country could be the precursor of the demographic window concept. The BPO sector, like the migrant Filipino workers, is driving up consumption and supporting the construction industry. Young call center workers, in short, are partly priming the economy.
The Philippines’ growing population will ultimately be the major market for cellphones, automobiles, appliances and the major services. The government, meanwhile, must prepare for the demographic transition and make sure that the momentum of economic growth is sustained instead of derailing it through unresponsive and myopic policies.