Philippines—Strong growth and reforms boost Australian exports
World Risk Developments April 2023
Despite high inflation and a challenging global economic backdrop, the IMF expects the Philippines to record the fastest economic growth in Asia in 2023 (Chart). Services, which account for over 60% of GDP, will underpin growth. Rising incomes will boost retail trade, while increasing international tourist arrivals will boost demand for hotels and restaurants, transport, and communication.
Progress on structural reforms is helping to ease impediments to investment and strengthening institutions and governance. The government is strengthening private-public partnerships by improving competitive bidding processes, ensuring projects are financially and technically sound and making it easier for firms to implement projects. Easing restrictions on foreign ownership in many sectors (such as shipping, railways, mining, and other services) and reduced corporate tax rates are also helping attract domestic and foreign investment. The government remains committed to developing infrastructure to enhance the business climate, attract more foreign investment and support productivity, allocating 5% to 6% of GDP for infrastructure spending in the 2023 Budget under the Build, Better, More Program. The Philippines 2 June 2023 entry into force of the Regional Comprehensive Economic Partnership Agreement will send a positive signal that the Philippines is open to foreign investment.
Recent strength in the Philippines economy is already contributing to stronger Australian exports. Total goods and services exports to the Philippines rose to $5.4 billion in 2021-22 (now Australia’s 17th largest export market), up more than 41% relative to 2020-21. Prospects for continued robust growth means the Philippines is on track to become a one trillion-US dollar economy in 2033, joining China, Japan, India, South Korea, Australia, Taiwan and Indonesia in this grouping within the Asia Pacific region. That will offer additional export opportunities for Australian businesses in resources and energy, agriculture and education.