DLSU-AKI presented its analysis of the Philippine economy until 2030 using the De La Salle forecasting and simulation models. The assessment shows that it tilts toward the moderately optimistic side of the scale, barring unexpected shocks. Growth will continue, wages and income per capita will increase, the very thin middle class is also slowly increasing, and poverty will decrease.
Having said the above, analysis shows that the Philippines will not do as well as the government keeps saying over and over. This means that the key targets set in the Philippine Development Plan (PDP) 2023-2028 will be attained a few years later, including income per capita which is said will be attained by 2028. The economy will grow, but not at 6.5-8%. It will register an average of 5.5% between now and 2030, with a peak of 6.4% in 2025. Poverty will decline, but will not reach 9% until 2035 (2028 in the PDP), and its hypothetical elimination would take several decades. At the same time, the macroeconomic situation is stable (again, barring shocks), with unemployment declining toward 4% and inflation staying close to the ceiling of the central bank’s target range of 2-4%. We also see the Peso depreciating and reaching P62 per dollar in 2027 and remaining there. The latter is not necessarily bad news as the economy will eventually adjust to this rate; and moreover, while initially imports will become more expensive, exports, and tourism, will become more price competitive.
The picture summarized in previous paragraphs reflects steadiness. The problem is that behind it there is what we call MOTS, or “More Of The Same.” Calls to further liberalize foreign direct investments (FDI) or improve the ease of doing business might be fine but these will not put the economy on a highspeed train. We are in the caboose. We have said it before: the country needs firms that manufacture high-quality products and export them, that is, compete in world markets.