A new report by the International Monetary Fund (IMF) suggests that growth in Southeast Asia is expected to be minimal at best this year. However, the one shining light appears to be the Philippines, despite the horrific typhoon and earthquake that hit the country in 2013.
Combined, Indonesia, Thailand, Malaysia, Philippines and Vietnam, are expected to grow by an average 4.9% for 2014 – slower than all of Asia’s anticipated growth of 5.4%. However, growth in the Philippines alone is expected to be higher at 6.5% for the year.
In a separate report, the World Bank also expects the Philippines to outpace the region. Reconstruction spending is anticipated to offset the slowness in consumption spending due to the effects of the earthquake and typhoon. Also, reforms, including the removal of barriers to doing business as well as improving logistics, “will strengthen the Philippines’ competitiveness and enhance its capacity to generate more and better jobs,” the World Bank said.
Indeed, the Philippines’ economy appears to be strengthening. This week, it was reported that February exports grew at their fastest pace in three years at 24.4% year-over-year. Electronics and semiconductor exports led the way, growing at over 26.0% for the month. In fact, electronics and semiconductors made up 40.4% of total exports in February, with the sector posting its third straight month of above 20.0% growth. It was also the highest growth since October 2010, when the sector grew 38.2%.
The growth in intra-Asia trade is also benefitting the Philippines. For example, trade between the country and Singapore is on the rise and in fact in a recent Philippines-Singapore Business Council (PSBC) meeting, it was announced seven Singapore-based companies are currently looking to invest in the infrastructure, transport, consumer services, and logistics sectors of the Philippines. For 2013, Philippine merchandise exports to Singapore were valued at S$4.01bn, 11.03% of the country’s total outbound shipments to Asia. The country’s imports from Singapore meanwhile, reached S$4.22bn in the same year.
Thanks to this growth, infrastructure improvements continue in the Philippines. The renovation and expansion of the Cebu International Airport will begin this year with anticipated completion date set for 2016. Meanwhile, Seair International has opened a hub at the Clark International Airport following airlines such as Qatar Airways, Asiana Airlines, and Dragonair.
While much investment has been made to improve the region’s export infrastructure, its domestic infrastructure still remains problematic. More investment in road and rail system needs to be made to help ease congestion as well as satisfy the growing domestic demand for consumer goods.