Philippines: One of the Fastest Growing Economies in Asia

Despite the slow growth of the economy in Q2 of 2018, Philippines remains as one of the best performing
economy in the ASEAN, with a growth rate of 6.7% in 2017, followed by Cambodia with 7.0%, and an
expected rate in 2018 and 2019 of 6.8% and 6.9%, respectively. Robust growth was driven by the
industrial sector through investment expansion and strong fiscal policy.

Aggregate Investment boosts the Economy

The country’s international relations expanded with a growth of 20.7%, higher than the 9.5% in 2017. The
said growth was driven by the international support of agriculture, tourism, and infrastructure. The Tax
Reform Acceleration and Inclusion Act (“TRAIN LAW”) did not incur much debt, compensated by the
increase in inflation rate. The economy’s Debt-to-GDP ratio lowered at 42% in 2017 and projected to
decline at 39% in 2022. Public construction boost by 21% in Q2 and private construction grew at 7.9%
from 6.7% in Q1. As a result, FDI inflows incurred a 49% increase in the first 5 months of 2018. Relatedly,
a big chunk of growth is evident as the capital formation grew at 27.4%, from the 25.4% in 2017, and
fixed capital grew at 14.8%, from 10.4% in 2017. The propelled growth of the economy does not only
boost the international investments but also make the unemployment rate decline.

Long Term Growth Prospects through Sound Fiscal Policy

The economic policy makers’ goal is to have a long-term inclusive growth of the country. The inflation rate
increased at 4% from the 3.2% in 2017, contributed by the increase in infrastructure expenses. The fiscal
performance outpaced expectations as the total revenue collections for 2018 amounted to Php 1.65
trillion, which is 21% higher than 2017. The healthy revenue collections can help the government attain
sustainability through relevant economic investments for the modernization of the country. The
Department of Finance (“DOF”) is fixing the tax system through reduction of tax liability of lower- and
middle-income earners to make the economy more inclusive.