The Philippines is expected to remain the fastest growing economy in the Association of Southeast Asian Nations-5 (ASEAN) this year through 2022, supported by the government’s infrastructure push and robust domestic private spending.
The Organization for Economic Cooperation and Development‘s (OECD) Economic Outlook report for Southeast Asia, China and India projected the Philippine gross domestic product (GDP) growing 6.6 percent this year and averaging 6.4 percent from 2018 to 2022, about 50 basis points higher than 2011 to 2015.
“Consumption and fixed investments… will continue to fuel economic growth until 2022, mainly underpinned by robust remittance inflow from overseas workers, planned big-ticket infrastructure projects and the resilience of offshoring and outsourcing industry,” it said.
The report underscored the need for the Philippines to attract additional capital and efficient investments to keep up with demand for infrastructure development in the fast-growing economy.
“While the bond market could provide an alternative source of financing, these markets need further development; the ratio of the total outstanding value of local-currency bonds to GDP remains relatively small,” it said.
The report added non-traditional tools, such as levies to capture the appreciation in land value resulting from infrastructure development, could also be considered to raise revenues.
The OECD gave a rosy economic forecast of the Philippines which, along with Viet Nam, were expected to lead in growth among ASEAN-5 from now through 2022.
ASEAN-5 also includes Indonesia, Malaysia and Thailand.
Southeast Asia is poised to achieve average growth of 5.2 percent between 2018 and 2022, relatively unchanged from 5.1 percent between 2011 and 2015.
Among the bloc’s 10 member countries, Cambodia, Lao PDR and Myanmar are projected to grow the fastest from now through 2022.
“Growth prospects of ASEAN are anchored on robust domestic private spending and on the infrastructure initiatives presented by a number of governments,” the report said.
Over the medium term, however, China’s growth rate is expected to slow to an average of 6.2 percent amid its structural reform challenges; while India’s average expansion rate in the next five years will remain robust at 7.3 percent.
Meanwhile, the OECD Economic Outlook report was issued Tuesday at the end of the three-day ASEAN Business and Investment Summit (ABIS) 2017.