On Phl potential growth of 5-7% annually for 15 years
July 17, 2025 | 12:00am
https://www.philstar.com/business/2025/07/17/2458454/phl-potential-growth-5-7-annually-15-years
Three beautiful business reports from The Philippine STAR have perked me up: ‘Philippines can grow 6.8 percent annually, become middle-class society by 2040’ (July 16), “BOI-approved manufacturing investments surge 165 percent in H1” (July 16) and “Projects with tax perks under CREATE hit P1.5 trillion” (July 14).
On the first report, the World Bank made an optimistic view that we can grow between 5.4 to 6.8 percent yearly until 2040 if productivity-enhancing measures are implemented. Among these are: reform complex business permitting processes that reduce barriers to entry and promote more competition, expansion in energy, telecommunications and logistics capacity to reduce costs, and expand exports and global value chain participation.
Fair enough. These are practical recommendations and are implementable. Among the sources of business bureaucracies are the local governments units (LGUs) as there are permits required from barangay to municipal/city to provincial.
National government infrastructure allocation should be revised to reward LGUs that have expanded their private investments by at least 10 percent yearly. This will hopefully propel LGUs to set aside their itch for bureaucracies to receive more infrastructure projects.
Related to GDP growth, three countries in the world have reported their second quarter (Q2) 2025 performance and they are all our neighbors. Vietnam has a whopping eight percent, from 7.2 percent in Q2 2024 and 6.9 percent in Q1 2025. China has 5.2 percent, from 4.2 percent in Q2 2024 and 5.4 percent in Q1 2025. And Singapore has 4.3 percent, from 3.4 percent in Q2 2024 and 3.9 percent in Q1 2025.
This implies two things. One, despite tariff uncertainties and trade realignment since last April when US President Donald Trump announced high tariff rates for many countries exporting to the US, Asian economies are doing good. Two, Asia has attained regional internal dynamism of its own and this is good for us. If Asians are still getting richer despite trade realignment, then we can export more to neighbors in the region, we can get more rich visitors and tourists from neighbors.
Contrast it in Europe, especially Germany and UK. Germany’s GDP growth over the past eight quarters (Q2 2023 to Q1 2025) is only between -0.3 percent to 0. Degrowth is very clear. The latest data on corporate bankruptcies shows rising trend: 1,250 companies in April 2022, 1,430 in April 2023, 1,910 in April 2024 and 2,130 in April 2025. It seems that Germany government is focused on save the planet, save Ukraine, save DEI, save illegal immigrants, but not save their economy.
Climate-obsessed UK has a declining electricity production: 81.3 terawatt-hours (TWH) in Q1 2016, 73.9 TWH in Q1 2019, 70 TWH in Q1 2022, and 66.5 TWH in Q1 2025. Reason is they are shutting down their dependable and cheaper coal plants, reducing their nuclear plants as they increase their wind-solar plants. Expensive electricity contributed to rising corporate bankruptcies: 1,870 companies in May 2022, 1,950 in May 2024, 2,240 in May 2025.
The country’s economic team should go back to London and Frankfurt, and possibly Paris, Rome and Amsterdam, entice the migrating companies there to consider the Philippines in doing business and have easier access to 700 million consumers in ASEAN alone.
The Philippines will report its Q2 2025 GDP growth on Aug. 7 or three weeks from now. Our recent performance are: 4.3 percent in Q2 2023, 6.5 percent in Q2 2024 and 5.4 percent in Q1 2025.
My own projection is around six percent growth in Q2 2025, for the following reasons. One, belated high spending in April to early May from the last elections. Two, low average inflation of only 1.4 percent in April-June 2025 vs 3.8 percent in April-June 2024; low inflation means higher consumer confidence and household spending is 74 percent of GDP. And three, good agriculture harvest as there were occasional rains even in supposedly hot-dry months of April-May.
The second and third reports in The Philippine Star are related. The Board of Investments (BOI) has approved P26.63 billion worth of investments for 14 manufacturing projects in January-June 2025, higher than the P10.05 billion in January-June 2024.
The Fiscal Incentives Review Board (FIRB) has approved 1,500 projects with total investment capital of P1.49 trillion, priority activities with incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law.
I congratulate the economic team, especially Budget Secretary Amenah Pangandaman, Finance Secretary Ralph Recto, Economics Secretary Arsenio Balisacan, for their steadfast navigation of the economy towards more liberalization and market-oriented policies. We just need to keep the growth momentum and not drop the ball.
Meanwhile, on the continuing changes in leadership under the Marcos Jr. administration, I am sad that Energy Regulatory Commission (ERC) chairperson Monalisa Dimalanta has resigned. I have seen her conduct press conferences at the ERC, saw her being a speaker in many energy seminars and conferences, talked to her occasionally, she is an intelligent, articulate and hard-working official. We were together also in Toronto last year along with other government, corporate and local media people, nuclear trade mission to Canada.
But I am happy to see that Mr. Dave Gomez is the new Secretary of the Presidential Communications Office (PCO). The Philippines has the third fastest GDP growth in 2023 and 2024 out of top 50 largest economies in the world. The economic team are doing their respective communications work but somehow the pessimist and detractors still manage to paint our economy as badly managed. The new PCO Secretary having both local and international exposure in communications should be able to inform the public of overall economic improvement of the country.
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