Demographics, fiscal stance plus factors in Philippine growth

MANILA, Philippines - The Philippines is one of the few Asian countries to watch out for because of positive demographics and stable fiscal position, said Ruchir Sharma, head of emerging markets for Morgan Stanley Investment Management.

In his keynote address during a recent investment summit organized by the Financial Times and First Metro Investment Corp. (FMIC), Sharma said the country’s demographics is an area where the Philippines ranks well.

“Given its working age population, it is still expanding at a decent pace. It has the necessary condition for being able to grow well over the next five years,” he said.

Aside from positive demographics, Sharma said the country’s fiscal situation is also quite stable, debt levels are relatively well, inflation is kept in check, and currency appreciation is managed. 

Sharma said the country should first focus on spending in infrastructure before spending on welfare and other subsidies.

Geographically, he said the country is doing well in keeping itself open to trade.

But on internal geography, Sharma said there is too much wealth or economic development concentrated in Manila. 

This, he said, is a reflection of the wide income inequality in the country that needs to be addressed.

Moving forward, Sharma said countries like the Philippines can pursue the development of low-end manufacturing because it creates jobs.

He noted high-end manufacturing brings about automation and competition which you don’t want at this stage.

Furthermore, he emphasized the importance of logistics and interconnectedness for these businesses, and not just labor costs.