President Rodrigo Duterte was on his best behaviour with China’s President Xi Jinping in October. Source: Wikimedia
The Philippine economy grew the fastest in Asean during 2016, apparently aided by stronger ties with China and Japan, increased infrastructure spending and the development of the call-centre industry.
GDP grew 7.1 per cent in the third quarter, beating forecasts on the back of growing investments and a rebound in agriculture, beating the rest of Asia.
The total value of goods and services in the Philippines climbed 6.7 per cent during the year, according to Manila’s estimates. The International Monetary Fund estimated that the archipelago’s economy was worth US$311 billion.
Presidential spokesman Ernesto Abella praised President Rodrigo Duterte’s new ties with Beijing and for deepening relations with the already keen Japan.
“Household consumption, as well as investments in construction, public infrastructure, as well durable equip drove the economic growth,” Abella said.
Six months after becoming president, Duterte continues to enjoy widespread popularity, with approval ratings topping 70 per cent.
Duterte’s violent crackdown on drugs, while controversial overseas, has won much domestic support.
“In terms of the impact on China, [the Philippines] is still one of the least dependent economies on China across the region,” said Rahul Bajoria of Barclays in Singapore.
“But over time, given the way the dynamics are playing out, the impact of China is expected to grow over the next three to five years. The real gains could come in the form of FDI [foreign direct investment], potentially both in manufacturing and in the mining sectors,” Bajoria added.
China pledged aid worth US$24 billion in October and while Japan has been the top source of direct investment, accounting for about 29 per cent of the total.
Duterte will chair Asean this year, allowing Manila to further deepen diplomatic ties.
Infrastructure spending reached 5 per cent of GDP this year with spending on motorways, Metro Manila and railways elsewhere. The “China+1.” programme gave foreign firms in China incentives to expand into the Philippines.
Duterte says he wants infrastructure development to help the Philippines’ rural poor. Pernia said: “We are carrying on with the macro-economic policies of the previous administration but ramping up infrastructure spending, promoting regional and rural development and investing heavily in human capital development, which includes health and education and nutrition.”