The Philippine economy will grow in the coming years, driven largely by private consumption. Consumption has been supported by slowing inflation--albeit likely to be short-lived--due to weaker global commodity prices, low unemployment rates of around 5% and constant inflows of personal remittances, which reached $34bn and made up 10.2% of GDP in 2018, though a decline in the US economy, which continues to be a key market for Filipino workers, may slow this flow.
To improve investment flows and ease the potential effects of mounting trade tensions, the Philippines has engaged in multiple free trade agreements (FTA). As a member of the Association of Southeast Asian Nations (ASEAN), it has signed FTAs with China, South Korea, Japan, India, Australia and New Zealand. On its own, it has agreements with the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), and with Japan under the Philippines–Japan Economic Partnership Agreement. Currently, the latter is the Philippines’ only bilateral FTA. However, it is keen to forge more to lessen dependence on the US and China.
The business environment in the Philippines has steadily improved, helped by a relatively open market, which is further boosted by the country’s strong macroeconomic position. However, its global and regional rankings still fall in the latest EIU Business Environment Rankings, overshadowed by other countries undergoing greater improvements.
Likewise, the Philippines pales in comparison with other countries in the EIU Technological Readiness Rankings, which assesses 82 economies on how prepared they are to address technological change. Despite significant improvements in mobile internet access across the country, full potential is hindered by an under investment in telecommunications infrastructure. Even with the introduction of new mobile infrastructure, internet speeds remain among the slowest in the region.
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