Philippines Wealth Creation: Economic Recovery Gains Momentum In 2022

This story appears in the August 2022 issue of Forbes Asia. Subscribe to Forbes Asia

Philippine peso, a business background

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This story is part of Forbes’ coverage of Philippines’ Richest 2022. See the full list here.

The Philippines’ economy is expected to shrug off the impact of rate hikes and rising commodity prices to recover to pre-pandemic levels this year. GDP is forecast to hit 7%—thanks to returning tourists and a rise in household spending—before inflationary headwinds slow growth to 6.3% in 2023 and 6.4% in 2024.

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Even with the budget deficit running over 8% of GDP (the highest in Southeast Asia), the new administration of Ferdinand “Bongbong” Marcos Jr. is eyeing an expansionary fiscal policy as it tackles unemployment and poverty. Finance secretary Benjamin Diokno assured markets in May that the country’s debt-to-GDP ratio is not a cause for concern as the government looks to consolidate fiscal resources. Meanwhile, with a wider current account deficit forecast in 2022, on top of higher global interest rates, the peso is set to weaken further against the U.S. dollar.

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According to Milken Institute’s Global Opportunity Index 2022, the Philippines ranked 83rd out of 126 countries, ahead of only Cambodia and Laos in the region. Improving foreign policy while continuing legislative and fiscal reforms, anti-corruption measures and ESG standards would help attract more investment, Rizal Commercial Banking’s chief economist Michael Ricafort said in February.

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Many economists expect the Philippines’ ease of doing business ranking to rise this year with recent initiatives to develop special economic zones and cut red tape, as Marcos focuses on a policy agenda to improve the country’s infrastructure and food production. There’s also the Philippines’ potential participation in the Regional Comprehensive Economic Partnership, a free trade agreement among Asia-Pacific nations—although the pivot to China under former president Rodrigo Duterte has yet to show returns.

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