Moody's: Philippines Likely Recorded Another 'Smashing Quarter'

The Philippines likely recorded another smashing quarter in the three months to June, according to Moody's Analytics.


Despite softness in the global economy, Moody's forecasts a 7.2% y/y GDP growth for the country, following the March quarter's 8%.


Moody's expects full-year GDP growth to be around 6.5% in 2013 and 2014, making the Philippines one of the world's fastest-growing economies.


Manufacturing is going strong amid solid domestic demand, offsetting softness in export-facing sectors. Private consumption is getting an additional boost from remittances, which have held up well through weaker global demand.


Business process outsourcing is a bright spot in the external sector, as less-competitive industries including electronics have faded.


The Philippines accounts for 15% of the global BPO market, and BPO represents 13% of total exports, compared with 6% in 1999.


Three years ago, the Philippines became the world's largest provider of offshore voice services.


The rise of BPO has widespread benefits for the economy, including employment opportunities for the university-educated who have  tended to move abroad because of a lack of prospects at home.


Employment directly and indirectly within the industry is estimated to reach 6.8 million by 2020, around 15% of total employment.


"President Benigno Aquino is rightly credited with helping turn the Philippines' economy away from perennial disappointment. Since taking the helm in 2010, Aquino has set the economy on the right course via infrastructure development, with a focus on upgrading transport links; an anticorruption push; a drive to halt tax avoidance; and improved government coffers. Continued success will depend on who takes the reins when Aquino steps down in 2016," says Moody's.