Philippine demographic profile to help boost economic growth

MANILA--The benefits of having a young population will help buoy the Philipppine economy this year and counter the effects of negative external environment, a Standard & Poor’s (S&P) report said.

“The growing and increasingly educated middle class, combined with a booming outsourcing industry, continues to boost consumption and investment,” S&P said in its “Economic Research: APAC Economic Snapshots” issue for September 2016.

The demographic profile is in addition to the improvement in the country’s economic fundamen-

S&P’s Economic Research: APAC Economic Snapshots September 2016 report says the Philippines’ economic fundamentals will continue to drive a strong domestic demand but cautions that international investors worry over potential diplomatic complications

tals, it said.

These fundamentals “continue to drive a strong domestic demand story, as indicated by nearly seven percent growth in the first half of the year.”

The domestic economy grew, as measured by gross domestic product (GDP), by seven percent in the second quarter this year, up from the previous quarter’s 6.8 percent and the previous year’s 5.9 percent.

Still, the services sector contributed the biggest share after rising by 8.4 percent from the previous quarter’s 7.6 percent and the previous year’s 6.7 percent.

The industry sector registered a slower growth of 6.9 percent from the previous quarter’s nine percent. It is, however, faster than the 6.1 percent output in the second quarter of 2015.

On the other hand, the agriculture sector posted a negative growth of 2.1 percent, which in turn is slower than the previous quarter’s -4.4 percent. A year ago, the sector posted a 0.1 percent contraction.

In the first half of the year, the economy expanded by 6.9 percent, near the upper end of the government’s six to seven percent growth target this year.

The report said the country’s demographic profile is seen to help fuel domestic expansion to “around 6.5 percent over the next few years, despite significant headwinds from sluggish external demand.”

The report said the Duterte administration’s economic policies “appear sound” as it focuses on several areas such as education and infrastructure.

On the other hand, the report cited that “international investors may be getting worried about potential diplomatic complications and short-term law and order issues on the ground.”

This risk is the only domestic factor the credit rater considers for the country.

“The main downside risks to the Philippine economy continue to come from external factors, such as a sharperthan-expected downturn in China or repeated bouts of market turbulence,” it added.