The Philippine economy grew at its fastest pace in 17 years in the first quarter of 2007, and this set me thinking:
The Philippine economy grew at its fastest pace in 17 years in the first quarter of this year, on the back of strong electronics exports, modest increases in government expenditure and consumption fuelled by election campaign spending.
Government economists said the country’s gross domestic product rose by 6.9 per cent from the same quarter last year, the highest rate since 1990 and surpassing many analysts’ who were predicting first-quarter growth of only 5.7 per cent, according to a Bloomberg survey. expectations. The economy grew by 5.5 per cent in the previous quarter.
The rapidly expanding services sector, which now accounts for half of economic output, pushed growth higher, as did outlay by the 17,000 candidates in last month’s polls.
Now basically, as we all know, global growth is very strong at the present time, and one significant reason for this is the strength of a number of newly developing economies. One factor which I feel is at work in all of this is a process known as the demographic dividend.
And I thought to myself Philippines is a bit young to be getting to much of this yet (in terms of median age, only around the 22/23 mark, normally things start to happen when median ages reach the late 20s). But then I found this piece in Bloomberg:
Philippine economic growth quickened in the first quarter, exceeding all expectations, as money sent home by nationals working abroad buoyed consumer spending and exports to China soared. The $117 billion Southeast Asian economy expanded 6.9 percent from a year ago, following a revised 5.5 percent gain in the previous three months, the National Statistical Coordination Board said in Manila today. Economists expected 5.7 percent.
Now, I have been speculating on Bonobo during the last week about the way in which housing-boom driven inward migration in developed countries (median ages in the 35 to 40 range, normally not above, and also see this post here) has non-linear growth impacts on their economies, the thought occurs to me that here in the Philippines we may be seeing the other side of the coin: excess children go out and send money back, indirectly raising the level of national savings and spending (and hence indirectly accelerating development).
So could we suggest that the average age at which Demographic Dividend take-off occurs can come down in countries which benefit from this process? If these sorts of chain mechanisms exist then that would explain a lot of the things we are seeing out there right now.
Here is another part of the recent positive story coming out of Philippines:
The Philippines is expecting a mining boom after some of the world’s biggest miners, including Anglo-American, BHP Billiton, Sumitomo and Xstrata, announced plans to dig for the country’s untapped mineral wealth. Industry leaders estimated that fresh mining investments in the next five years could reach $10bn, a rise from the government’s original target of $6.5bn.
The government expects that mining investments, which averaged only $260m in the past four years, to surge to $1.6bn next year and $2.8bn in 2008. Mineral output is expected to rise almost six-fold in three years from $1.3bn this year to almost $6bn by 2010, narrowing the gap with Indonesia, Asean’s biggest mining exporter.
So the Philippines is obviously benefiting from the surge in commodity prices produced by the recent strong global growth. Doubts however remain:
Arif Seregar, chairman of the Indonesian Mining Association, said Indonesia’s mining output continued to grow but warned that future expansion could be hampered by uncertainties over the government’s plan to introduce a new mining law later this year. Most of the world’s mining companies have yet to be convinced that policy stability is genuine in the Philippines. More than 300 mining executives surveyed by the Vancouver-based Fraser Institute cut the Philippines’ score for the attractiveness of its mining policies, putting its ranking just a few notches from the bottom, occupied by Zimbabwe.
What is interesting about all of this is how societies with young median ages seem to suffer from greater political instability (think Bolivia when compared with Chile). Obviously the slow processes of demographic change go hand in hand with improvements in the institutional environment (or they don't, in which case the country doesn't advance). It's all a question of "maturity" I guess.
It will be interesting to see how the future evolution of the Philippines works out in this regard.
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