DESPITE political turbulence, natural disasters, and persistent corruption, the Philippines remains on a solid growth trajectory, according to Dr. Bernardo Villegas, eminent economist and founding member of the University of Asia and the Pacific (UA and P).
Speaking at a recent UA and P economic briefing attended by members of the diplomatic community, Villegas projected a 6% GDP growth for the next two years, with potential to reach 6.5% under favorable conditions.
‘Even if Vice Ganda becomes president, we’ll still grow at 6%,’ Villegas quipped, underscoring his belief that strong institutions and sound economic policies-not personalities-drive growth.
Agriculture, FDI, and Anti-Corruption: Pillars of Progress
Villegas emphasized three critical conditions for the Philippines to achieve high-income status by 2040:
Agricultural reform, led by the Department of Agriculture and Secretary Francisco Tiu-Laurel, which he described as showing ‘real improvement.’
‘Our average agricultural growth over the last 10 years was just 0-1%. But in the third quarter, it hit 7%. That’s amazing,’ he said. ‘Our assignment to President Marcos Jr. is to make sure agriculture grows at 3% annually by the time he leaves office.’
Foreign direct investment (FDI), with a target of $15 billion annually. ‘This year, we’re expecting more than $25 billion. Little by little, we’ll reach $50 billion,’ he said, citing growing interest from Spain, Japan, Korea, and Taiwan in infrastructure projects.
Good governance, which he called ‘bittersweet.’ ‘It’s not easy to change our culture. It may take us more than 20 years,’ he admitted. ‘We fight corruption not just for economic reasons, but because it must be banished from this world.’
Villegas also praised the Bangko Sentral’s institutional strength, citing its role in bringing inflation down to 1.8% from double-digit levels a decade ago.
‘Painfully, slowly, but surely, we’ve built strong institutions over the last 30 years. That’s why the Philippines is no longer the sick man of Asia.’
Stock Market Not a True Barometer
Villegas dismissed concerns over the Philippine stock market’s decade-long slump, arguing that it does not reflect the real economy.
‘The economy can be growing at 8%, but the stock market is influenced by external factors like the U.S. dollar,’ told reporters after the forum.
He attributed the market’s fragility to low domestic savings and limited investor participation.
External Shocks and Domestic Resilience
Villegas highlighted the Philippines’ resilience through three global crises: the 1997 Asian financial crisis, the 2008 global recession, and the COVID-19 pandemic.
‘In 1998, Indonesia dropped by -13%, Thailand by -7%. The Philippines? Just -0.5%. In 2009, we didn’t decline at all-we had a V-shaped recovery,’ he said.
He credited this resilience to robust domestic consumption, fueled by remittances and the BPO sector.
‘US$40 billion from OFWs, another US$40 billion from BPOs. Multiply that by 58 to 59 pesos per dollar-that’s over ?4.6 trillion in the hands of Filipino consumers,’ he explained.
Villegas forecasted a third-quarter dip to 5.3% due to infrastructure corruption and natural calamities, but expects a rebound in Q4.
‘Christmas starts on September 1st here. With OFWs returning and spending, I see Q4 growing at more than 6%,’ he added.
Regional Unity and Digital Transformation
The briefing also spotlighted broader regional and technological challenges. Villegas and other speakers called for a strong ASEAN economic union, not just a free trade area, to counterbalance the influence of China and India.
‘With 620 million citizens, mostly upper middle income, ASEAN can be a formidable economic force,’ one speaker said.
On the digital front, the Philippines ranked low in global digitalization metrics, but Villegas remained hopeful.
‘AI seminars are held daily, and universities are actively preparing the next generation,’ he noted. ‘Despite the weakness of our public education system, Filipinos are adjusting to a digital world. We have one of the highest per capita smartphone and email usage rates.’
Infrastructure and Foreign Confidence
Villegas highlighted growing interest from foreign investors in Philippine infrastructure projects.
He cited the Cebu-Cordova Link Expressway as a model of successful public-private collaboration.
‘We should increasingly entrust infrastructure to private sector giants like DMCI and Ayala to minimize corruption,’ he said.
Corruption: A Persistent Challenge
While optimistic about current anti-corruption efforts, Villegas acknowledged skepticism.
‘Yes, we’ve jailed presidents, but they come back. Corruption is not an obstacle to becoming first-rate-look at Korea,’ he said. ‘But we must fight it with all our might, not just for pragmatic reasons.’