Recently announced growth figures look impressive, but they conceal the structural issues holding back the Philippine economy.
Recent reports indicate good reasons to be optimistic about the future of the Philippine economy. The Philippine Development Plan 2023-2028 assumes an annual growth rate of 6.5 to 8 percent for 2024-2028. The country registered growth of more than 6 percent for a few years prior to the COVID-19 pandemic, which many think can be repeated and sustained. The country has a promising tourism sector, and many on-going infrastructure projects, including the renovation of Manila’s international airport. Wages are increasing, unemployment and underemployment are down, the dependency ratio is expected to continue declining until 2035, and the middle class is growing. For a country that struggled for decades, all this is good news.
Yet, projections about the Philippine economy are overly optimistic. The country will certainly continue growing, and the overall situation will improve, though much more slowly than many think. Optimistic projections about developing countries tend to be based on simple extrapolations that hardly ever materialize. In the case of the Philippines, overoptimism also seems to ignore a number of important structural issues that need to be addressed if the country is to maintain a high growth rate and catch up with its neighbors.