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2013 Economic Review of the Philippines

Jan 22, 2014 | Valerie Wong

The Aquino Administration of the Philippines has been working on social spending programs, cash transfers for the indigent, and budget boosts for education and health. It's also dependent on the private sector to assist in funding major infrastructural projects under the Public-Private Partnership Program. However, even back then, prior to the devastation of Typhoon Haiyan, the Philippines were already facing the tough task of governance reformation and improvement of the judicial system in order to lift the corrupt reputation of the nation. With that said, the reshuffling and reorganization of governance is a step in the right direction in making the Philippines are more investor-friendly country.

At present, thanks to the Philippine constitution, foreign investments have been dulled thanks to a law restricting foreign ownership of important sectors and activities (such as public utilities and land ownership). Regardless, at the beginning of 2013, everything seemed to be in order and 2013 appeared to be another banner year for the improving economy of the Philippines. Its growth has been outpacing the rest of its Southeast Asian nations, earning Moody's investment rank upgrade. As for Fitch and S&P, the Philippines enjoyed a credit ratings upgrade even as the global economic mood was lukewarm at best.

The Promising Start in the First Few Quarters of 2013

In the World Economic Forum's Global Competitiveness Index for 2013-2014, the country has jumped from 65th place to 59th. The caravan of confidence extends all the way to the World Bank, which predicted a whopping 6.9% growth for the Philippine economy in 2013 at the time (this was before Typhoon Haiyan rocked the nation), and even 6.5% in 2014, which is amazing considering the growth rate of the rest of the Southeast Asian nations were around 3% to 4% at best, and at 5% at their most optimistic. Manila's Asian Development Bank echoes the World Bank's predictions. As for the International Monetary Fund (IMF), it still forecasted a more modest but still high 6% 2013 growth and a 5.5% 2014 growth.

The boom can be directly accredited to the dollars being sent by OFWs or Overseas Filipino Workers. In 2014, the country's central bank expects $23.6 billion in remittances, which is a record high. During 2013's first 10 months, remittances already hit $18.54 billion, so it's not that far-off a prediction. In the world (next only to India, China, and Mexico), the Philippines is able to rank as the 4th biggest recipient of remittances from fellow Filipinos based on the U.S. and the Middle East. What's more, there's a building and real estate boom taking place in traffic-congested Manila, from the suburbs of Bulacan to the high-income district of Bonifacio Global City.

Typhoon Haiyan, Its Impact, and What Awaits the Philippines in 2014

When Typhoon Haiyan hit the Philippines, the mood in the country became subdued. Haiyan was only one of many adverse events in a series of natural and man-madedisasters, including a pork barrel scandal, an earthquake, and a rebellion in Zamboanga. Latest reports suggest that the death toll is at 6,000 and about 1,779 people are currently missing for the super typhoon. Haiyanhasn't only released a torrent of floods and strong winds, but also despair among the populace, resulting in 4.4 million people homeless and $15 billion in damages.

With that said, there has been an outpouring of support and charitable donations that have hastened the recovery of places like Tacloban. Furthermore, the Philippines remains a global-level competitor and one of the fastest growing nations economics-wise in Southeast Asia, such that assuredly, even the most modest of forecasts from organizations like the IMF still nets a GDP growth much higher than many other countries in the region. This ensures that doing business in the Philippines is as easy as possible so as to attract higher levels of local and foreign investments.

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