In the report "Asean on the Move" released by renowned financial services group Nomura, it is predicted that the Philippines’ gross domestic product (GDP) will climb from this year’s 6.7 percent to 6.8 percent.
The organization anticipated that the Philippine economy will outperform its neighbors in Southeast Asia. They also noted that at present, the economies of the Philippines and Malaysia are the strongest. On the other hand, Indonesia and Thailand will have a harder time, with Singapore having a stable economy.
But Nomura asserted that between Malaysia and the Philippines, they prefer the latter because it possesses a lower fiscal drag, which equates to stronger growth prospects. They also cited the Philippines as an example wherein fiscal reforms result to positive contributions to the country’s growth.
Nomura recalled that although the fiscal reforms caused problems during the first few stages of the integration, it later lead to improvements in the volume and quality of public spending. These also resulted in more private investments.
Fiscal reforms have helped the Philippine economy across several aspects. Interest rates are relatively lower across the board and businesses are more attractive to investors. Likewise, the country has been receiving better credit rating upgrades, which collectively leads to higher contributions from investment spending to GDP growth.
GDP projections for the Philippines are higher than Malaysia’s 5.4 percent in 2014 and 4.3 percent in 2015.