By Derco Rosal, March 27, 2025; Manila Bulletin
Improving cross-border trade and combating government corruption could transform the Philippine economy into a more sophisticated and investor-attractive one, propelling growth by an additional three percent over four years.
“Combining deliberate, ambitious structural overhauls can help the region’s largest economies achieve higher potential economic growth and sustainably attain high income levels,” Anne-Charlotte Paret Onorato, economist at International Monetary Fund’s (IMF) Asia-Pacific department, said in a blog published March 25.
Onorato said the Philippines, Indonesia, Malaysia, Thailand, and Vietnam are the “five largest emerging markets out of 10 economies in the Association of Southeast Asian Nations (ASEAN).”
On average, these major ASEAN economies could increase long-term real economic output by up to two percent after two years and up to three percent after four years should they implement comprehensive and simultaneous economy-wide reforms.
The country’s gross domestic product (GDP) expanded 5.6 percent last year, falling largely short of the government’s revised target of six to 6.5 percent. For 2025, the Marcos administration is confident of hitting six-percent growth or higher.
If the government achieves even the lower end of its 2025 target, the domestic economy could accelerate by about nine percent, with the simultaneous reforms already factored in.
Specifically, Onorato said the broad areas when policymakers should focus on are “trade, economic openness, economic sophistication, investment and governance conditions, and human development.“
According to Onorato, while the major ASEAN economies are generally “more open than the average emerging market,” they remain to have “more barriers to trade—and are relatively harder to trade with” compared to advanced economies.
What would help the five largest emerging ASEAN countries accelerate their growth would be “improving logistics and trade facilitation to make cross-border transactions faster, cheaper, and less uncertain,” Onorato said.
Aside from improving the trade system, countries should also focus on leveling up the quality of education and employment programs.
“Spending more and better on high-quality education, improving the quality of learning, and better matching skills with jobs would help these countries improve productivity and move up the sophistication ladder for the economy at large (rather than just in specific sectors),” Onorato said.
Anti-corruption measures
Pushing for economic reforms might suffer political setbacks, Onorato noted. Thus, a coordinated approach to implementing reforms is suggested.
There were no specific courses of action to take but the economist said governance and efforts combating corruption should be strengthened.
“The quality of the infrastructure would also support accountability and business certainty and likely improve investment,” Onorato further said.
All of these taken, Onorato reiterated that major simultaneous reforms could significantly raise the country’s economic output levels. This would contrast to a “more modest” economict benefits from a major reform enacted alone.
“Wide-ranging reforms can build resilience to shocks in the face of uncertainties and help the private sector drive growth,” she added.
