Fom 43rd to 16th largest economy in the world

HSBC projects the Philippine economy to become the 16th largest economy in the world, 5th largest economy in Asia and the largest economy in the South East Asian region(*) by 2050.

According to the 2011 World Bank statistics, the economy of the Philippines is the 43rd largest in the world, and it is also one of the emerging markets in the world. The Philippines is considered as a newly industrialized country, it has been transitioning from one based on agriculture to one based more on services and manufacturing. According to the CIA Factbook, the estimated 2012 GDP (purchasing power parity) was 416.721 billion. Goldman Sachs estimates that by the year 2050, the Philippines will be the 14th largest economy in the world, Goldman Sachs also included the Philippines in its list of the Next Eleven economies (**).

Positive effects overseas employment

Most of emerging countries rely on foreign creditors to bridge the gap between their exports and imports, but the Philippines rely on overseas employers, an international affairs publication said recently. Over 10 million Filipinos, equivalent to about a quarter of the country’s labor force, live or work abroad, permanently or temporarily, legally or illegally, in over 200 countries. “Their remittances are equivalent to 8.5 percent of GDP [gross domestic product], helping the country to plug its trade deficit and amass over billion of currency reserves,” it added. As a result, the Philippines has become a net creditor to the rest of the world, not just a net supplier of labor.

The peso recently weakened against the dollar on global growth concerns and continued concerns on the geopolitical tensions in the Korean peninsula. The peso is expected to trade within the P41.15-41.35 range in the days to come, making working overseas even more attractive for overseas workers and knowledge migrants.

Upgraded credit rating

These impregnable external finances are one reason why Fitch, a ratings agency, awarded the Philippines its first investment-grade credit rating in March. The upgrade was long awaited and warmly greeted. “Both this government and its predecessor have worked hard to put the country’s fiscal house in order, reducing its debt from 68 percent of GDP in 2003 to 41 percent last year, while refinancing it more cheaply, lengthening its maturity [to over ten years on average] and increasing the proportion denominated in pesos, for which the world shows strong appetite,” the publication added. In principle, the upgrade should widen the pool of investors willing to buy the government’s debt and lower its cost of borrowing, it said.

Next to overseas workers (knowledge migrants), primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include the United States, Japan, China, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand.

*() Southeast Asia**

Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic and volcanic activity. Southeast Asia consists of two geographic regions: Mainland Southeast Asia, also known as Indochina, comprises Cambodia, Laos, Myanmar (Burma), Thailand, Vietnam and Peninsular Malaysia, and Maritime Southeast Asia comprises Brunei, East Malaysia, East Timor, Indonesia, Philippines, Christmas Island, and Singapore.

() N-11**

The Next Eleven (known also as N-11) are the eleven countries – Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam – identified by Goldman Sachs investment bank and economist Jim O'Neill in a research paper as having a high potential of becoming, along with the BRICs, the world's largest economies in the 21st century. The bank chose these states, all with promising outlooks for investment and future growth. The criteria that Goldman Sachs used were macroeconomic stability, political maturity, openness of trade and investment policies, and the quality of education. The N-11 paper is a follow-up to the bank's 2003 paper on the four emerging "BRIC" economies (Barzil, Russia, India and China).