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Outsourcing News: Ups and Downs of the PH economy

Posted on March 13, 2017

Cutting corporate tax good for outsourcing

Philippines’ economy had a 6.8 percent growth in the first quarter. In the second quarter, it rose to 7 percent.

Last year, the average gross domestic product (GDP) growth of the country was 5.5 percent. In this year’s first half, the average GDP growth is 6.9 percent.

The Philippines is currently experiencing a strong economic performance. However, external factors, as well as regional and local political issues, can have drawback risks to the country’s strong economy.

External factors include changeable global market due to the incoming interest rate increase by the US Federal Reserve, and the continuous economic slackening in China.

The Duterte administration

The Duterte administration has revealed its 10-point agenda to address the poverty in the country. The budget deficit ceiling is also raised from 2.8 percent to 3 percent of GDP.

The Duterte administration economic policies are intact since the policies target higher spending for infrastructure and education.

However, investors are wary about the statements released by President Duterte against US President Barack Obama and UN. Short-term law and order issues in the country are in question, and the Philippine peso has been one of the weakest performers since June.

Nevertheless, the declaration of the state of lawlessness after the Davao City bombing and the controversial law and order policies would not have an effect on the country’s credit rating.

Projections and Outlooks

Due to higher investments, strong consumption, and the robust industry of the business process outsourcing (BPO), the Philippines would be hitting the average 6.5 percent GDP growth for the next years. Despite the external factors and oppositions, Philippines will drive the growth of around 6.5 percent as projected due to underlying demographic trends.

Consumption and investment will also boost due to the growing and increasing number of educated middle-class Filipinos combined with the booming and flourishing outsourcing industry.

Philippine economy is expected to expand by 6.1 percent this year and 6.3 percent by next year before slowing down to 6.2 percent.

 

Source:

S&P tags downside risks to Philippine growth, The Philippine Star