On May 29, 2013 the Philippines' National Statistical Coordination Board (NSCB) announced that the Philippines government revised upward its 2012 annual growth to 6.8% from 6.6%, citing new economic data. This new revision showed the Philippine economy grew 6.8% in 2012 from 3.9% in 2011.
The World Bank's Philippine Economic Update released early May 2013 commented, "the Philippine economy expanded by 6.6 percent in 2012 (note: the government revised to 6.8%), exceeding most expectations, including the government’s own target of 5 to 6 percent. Higher growth was driven by strong private consumption and construction, and the recovery of public spending and net exports. Philippine growth in 2012 was the highest among the ASEAN-5 countries..".
The new Asian Development Bank (ADB) Outlook 2013 reported that the Philippine economy is expected to sustain strong growth in 2013 and 2014, with inflation within the policy target, but the challenge is to make growth more inclusive by stimulating employment, said the press release. ADB projects, "annual gross domestic product growth for the Philippines of 6% for 2013 and 2014, down slightly from 6.6% in 2012". “Governance reforms and prudent macroeconomic management have laid the foundation for strong growth…,” said Neeraj Jain, ADB’s Country Director for the Philippines, reported the Board of Investment (BOI)'s website investphilippines.org. “A stronger industrial base is vital for increasing jobs, and will help make growth more inclusive and sustainable,” he added. The services sector was a key growth area and the exports also picked up, said the ADB. Inflation eased to a five-year low of 3.2%.
In 2012, the World Economic Forum (WEF) moved the Philippines up ten points to the top half of its global competitiveness ranking for the first time in its history. These economic improvements are in part due to President Benigno Aquino's steps to increase transparency and address corruption and from renewed international confidence in the Filipino economy even during the global slowdown, said the BOI.
The Philippines’ recent credit rating upgrade to investment grade by Fitch and Standard & Poor’s (S&P) will help spur further growth. S&P said the outlook on the Philippines was stable, and raised its rating to BBB from BB+. ‘‘The upgrade on the Philippines reflects a strengthening external profile, moderating inflation and the government’s reliance on foreign currency debt,’’ S&P credit analyst Agost Benard said in a press statement. S&P said the Philippines had worked to improve its fiscal position by restraining expenditures, reducing foreign currency debt, deepening domestic capital markets and improving revenues, while keeping inflation low. The upgrades mean the government pays lower interest rates on debt and the country will likely attract more foreign direct investment, reported the BOI. The Philippines stock market is one of the best performers in the region.
The challenge is in the final three years of the Aquino administration, after its popularity on the corruption crackdown and encouragement of local and foreign investment. The ADB's outlook report said that, "persistently high levels of unemployment and underemployment, with the latter at 20% of the labor force in 2012, remain a key concern. Continuous deployment of oversea workers masks the severity of the unemployment problem". Furthermore, "reviving the industrial and manufacturing sector, where the Philippines has lagged most other larger countries in Southeast Asia, is critical", the report says. This will require a stronger push by policymakers to improve infrastructure and the business environment to encourage manufacturers to locate in the country.
THe World Bank's report commented, "Moving forward, the government needs to focus its attention on generating higher, sustained, and more inclusive growth—the type that creates jobs and reduces poverty. With almost 10 million unemployed or underemployed Filipinos as of end-2012, around 1.1 million potential entrants to the labor market each year, and poverty incidence that hardly declined between 2009 and 2012, the country faces the enormous challenge of providing good jobs to 14.4 million Filipinos through 2016. Sustaining high GDP growth of above 5 percent will be able to provide good jobs to around 2.2 million Filipinos between 2013 and 2016. However, by 2016, that still leaves 12.4 million Filipinos who will have no other option but to work abroad, work in the informal sector, or create jobs for themselves".
"The following thematic reform areas deserve the highest priority: i) simplifying business rules and regulations to encourage the growth of firms of all sizes, ii) enhancing competition in the economy, giving priority to sectors with the greatest potential in creating jobs, such as agriculture, and iii) securing property rights on land for both rural and urban dwellers and businesses. To better sustain these reform efforts and to increase their chances of success, the government will need to continue to invest more, and more efficiently, in health, education, and infrastructure", said the World Bank's Philippine Economic Update Report.