While emerging markets dominate the economic growth forecasts, the Philippines is being hailed as one of the bright spots.

Emerging economies are dominating
economic growth forecasts,  but the
Philippines is being hailed as one
particular "bright spot" to watch, as cited in the New York Times this week.

According to data released last week,
the Philippine economy grew by 5.9 per cent in the second quarter, above
speculators’ estimates but below the first quarter performance of 6.4 per cent,
which outpaced all other countries in the region, except China.

So what’s changed within a country that
has previously faced major socio-economic challenges? There are a number of
factors that are driving positive attention in its direction, according the New
York Times.

Firstly, its contribution of $1.0 billion
to the International Monetary Fund in June this year instilled some confidence
- As while many struggling European countries face mounting debts, the
Philippines paid back the last of its IMF loans back in 2006. In view of this
prospective financial stability and of Standard & Poor’s recent upgrading
of the country’s debt rating to just below investment grade, investors could
soon be scoping out money-making opportunities. This is supported by recent
Philippines Stock Exchange performance outpacing benchmark indices in Malaysia
and Indonesia, and its main index reaching 19 record highs since the start of
2012.

Demography

Secondly, socio-economic factors
contributing to the nation’s increasing competitiveness include the demographic
of the growing population – with 61 per percent of its inhabitants being of working
age, the Philippines benefits from a young workforce , providing an advantage
over its ageing Asian neighbours. And politically, measures have been taken to
warrant increased stability, including "aggressive action to address
corruption", as cited by the New York Times.

Thirdly, the services sector is booming. “The Philippines,
where English is widely spoken, surpassed India last year as the world’s leading
provider of voice-based outsourcing services like customer service call
centres," said the New York Times in its recent report. And outside the country,
9.5 million Filipino expats are contributing to the wealth pool, responsible for
repatriating approximately $20billion of revenue to their home country in 2011.

Looking ahead, the future could be bright for the
Philippines. It holds an estimated 21.5 billion tons of metals in the country
that have yet to be exploited. The export and manufacturing industry, while
underdeveloped so far, is a potential source of growth, if other Asian
economies’ success stories are anything to go by. The New York Times also noted
that the Philippines, 44^th largest economy in the world, holds an
estimated US$70 billion in reserves and its local currency, the Peso, recently
reached a four-year high against the dollar.

This has led to many investors citing the country’s growth
potential - Citi Private Bank for one has included the Philippines among in its
list of Global Growth Generators (“3G” countries), that over the next 5, 10, 20
and 40 years are expected to deliver high growth and profitable investment
opportunities.

HSBC recently estimated that based on current trends, the
92million people-strong country is on course to work its way up the ranks to
become the 16th largest economy in the world by 2050. Supporting this view, the
Wealth Report 2012, published by Frank Knight residential group, forecast the
country’s GDP to grow at an average annual rate of 7.3 per cent between 2010 and 2050 –
placing the nation’s economic rating not far behind rising BRIC star, India,
with an 8 per cent GDP growth forecast. Watch this space.