Is the Philippines' Golden Age of growth over?

The Philippine economic growth story since 2010 has been a remarkable one.

- By KELLY BIRD

The economy has more than doubled in size in the last 15 years, creating a virtuous turning point for the country. Millions of quality wage jobs have been created that by 2019, the modern sector was pulling workers out of the informal sector for the first time ever. In parallel, the stubbornly high poverty rate began to fall fast. This growth has been influenced by what I call the “Growth Triplets” — remittances from overseas Filipino workers, revenues from business processing operations, and a surge in public spending on infrastructure. All three have big multiplier effects on the economy.

Growth has been supported by sound economic institutions and good government policies. An unspoken convention in the Philippines government system is that good policies continue from one administration to the next. Many of these pro-growth policies go back to the 1990s such as the creation of the independent Bangko Sentral ng Pilipinas, which anchors macroeconomic and financial stability, and significant trade liberalization efforts. During the Aquino administration, fiscal consolidation was rewarded with upgrades in sovereign credit ratings, leading to lower debt costs and creating the fiscal space for the Duterte administration’s Build Build Build infrastructure program. Duterte’s tax policy and investment reforms lifted growth further while the Marcos administration has continued infrastructure spending under its Build Better and More infrastructure program.

However, economic growth in the past two years has fallen short of its potential, averaging 5.6 percent instead of 6.0-6.5 percent annually. Does this mean the Philippines’ “Golden Age of Growth” is over?