BPO, Export Earnings Driving Philippines to $1 Trillion Economy by 2030

The Philippines is set to be a $1-trillion economy by 2030, according to US analytics company IHS Global Insight. IHS chief economist for Asia-Pacific Rajiv Biswas predicts that the Philippines can become a $695-billion economy by 2025 and a $1-trillion economy by 2030, riding on a growing IT-BPO (information technology and business process outsourcing) sector and strong OFW remittances. IHS director of sovereign risk Jan Randolph also noted that the Philippines has been on an upward rating trajectory for the last few years because of new sources of export earnings. 

IHS upgraded its outlook on the country’s credit rating from stable to positive due to a combination of improved financial fundamentals, governance standards and investor confidence.

“Apart from the clearly strengthened macro-financials over the last few years, the more recent upgrade to the Philippines’ outlook to positive in the third quarter rested on improved governance standards and reforms enhancing competitiveness under the Aquino administration,” said the IHS report.

The firm added that the Philippines is the only sovereign in Asia to have improved credit prospects in the future. The country’s current credit rating of BBB- (minimum investment grade) has a chance of being raised in the next few years.

IHS reported that better fiscal management, a strong economy and current account surpluses helped boost the country’s liquidity and improve its debt manageability. The current account has been in surplus status since 2003. This year, the current account surplus hit $4.7 billion in the first six months, driven mainly by remittances from overseas Filipino workers, growing revenues from the BPO industry, tourism earnings and lower energy import bills.

The country’s debt manageability, as measured by government debt as a percentage of gross domestic product (GDP), is also improving. From 68.1 percent in 2003, general government debt dropped to 36.2 percent at the end of June 2015.