BusinessWorld | Posted on November 25, 2015 11:20:00 PM
THE PHILIPPINES is expected to ride favorable demographics and rapid growth in global trade to become the 16th largest economy in the world by 2050, according to the Trade Winds report issued by the research arm of Anglo-Chinese bank HSBC.
The country’s exports are projected to grow fivefold to P329 billion by 2050, HSBC estimated, on the assumption of a growth trajectory that remains among the highest in Asia, and enhanced by regional integration. That growth path puts it significantly ahead of the pace of overall global export growth, expected by the bank to quadruple to $68.5 trillion by 2050.
“We see more trade and investment opportunities with the integration of the ASEAN (Association of Southeast Asian Nations). The Philippines plays a significant role in leveraging the synergies and the economies of scale made possible by the integrating economies in the region,” HSBC head of Philippine commercial banking Mimi Concha was quoted as saying in a news release issued by the bank.
The Trade Winds report anticipates an overall decline in trade costs globally, particularly logistics, driven by the use of larger cargo vessels, expanded shipping lanes and energy-efficient transport technologies.
HSBC also sees the share of intra-Asian exports expanding to 27% of the global total from 17% currently, based on “nimble networks of multinationals that create their own specialized value chains” that will also raise levels of prosperity in the countries in which they operate.
The Philippine economy is currently reckoned as the 39th largest by both the World Bank and the International Monetary Fund, based on 2014 data.
Specific to the Philippines, Ms. Concha said “investment in infrastructure, such as ports, airports and better road networks will push down prices. There have also been changes in policies such as the rent amendments to the Cabotage Law. Definitely there will be big improvements in the movement of products and people as the infrastructure and trade environment improves.”
One of the mainstays of the Philippine economy, the business process outsourcing industry, will continue to surf the democratic wave “as Filipinos are one of the youngest in this part of the globe… coupled with improving literacy.”
Paul Skelton, who heads HSBC’s Asia-Pacific commercial banking division, said: “The importance of trade’s contribution to global growth and prosperity cannot be underestimated. Asia’s position at the leading edge of technological and supply chain innovation gives the region a unique opportunity to benefit from this next wave of globalization.”
The expansion in trade to 2050, according to the Trade Winds report, represents a “third wave” of globalization, following similar growth surges in the decades before 1913 and the post-World War II period.