Philippines slips in competitiveness

June 6, 2014 at 11:26

The country placed 42nd out of 60 economies in the 2014 World Competitiveness Yearbook (WCY), four places down from 38th out of 60 last year. The report assessed economic performance, government efficiency, business efficiency and infrastructure of the economies surveyed, using economic data from international and national sources, as well as an opinion survey in generating over 300 criteria to measure the competitiveness of economies. The Philippines declined in all four key dimensions: six places to 37th in economic performance, nine spots to 40th in government efficiency, six notches to 27th in business efficiency, and two places to 59th in infrastructure. In a technical note accompanying the report, IMD said while the Philippine economy expanded by 7.2% last year — the second fastest among economies surveyed — and upgrades from credit ratings agencies were clinched, “export growth was less impressive… and stock markets cooled significantly after a hot streak in 2012.” Poor infrastructure, a looming power crisis, and allegations of corruption involving high-level public officials that began last year also dented perceptions of government and business efficiency, the Switzerland-based business school added. Still, IMD cited positive signs that may elicit “cautious optimism” towards the Philippines. “For one, the three percentage point decrease in poverty incidence in 2013 compared to the previous year may be a sign that several years of strong economic growth may finally be affecting the poor,” IMD said in its report. “Another bright spot is investments, which grew by an annual average of 11.3% in the last four years after growing by an annual average of just 3.5% in the decade before that,” it noted. “With improving outlook from credit-rating agencies and confidence from foreign investors, investments are expected to continue to improve in the coming years.” Citing inputs from local partner the Asian Institute of Management Policy Center, the same report cited challenges the Philippines faces this year, namely: in infrastructure, “many roads are unpaved, public transportation is inefficient, and the primary airport is operating beyond capacity”; regarding corruption, “improvements in governance are being made but [there is] still a long way to go”; unemployment and underemployment rates are one of the highest in Southeast Asia; an undeveloped financial system that makes access to finance one of the biggest challenges facing small- and medium-sized firms; and natural disasters like the storms, rains and earthquake that caused major damage last year. Many other emerging markets saw rankings fall this year such as China (21st to 23rd), India (40th to 44th), and Thailand (27th to 29th). Elsewhere in Southeast Asia, Malaysia and Indonesia moved up, from 15th to 12th and 39th to 37th, respectively. Globally, the United States topped the list, followed by Switzerland for the second year in a row. They were followed by Singapore, Hong Kong, Sweden, Germany, Canada, the United Arab Emirates, Denmark, and Norway. Venezuela placed last, followed by Croatia, Argentina, Greece, Bulgaria, Slovenia, Brazil, Jordan, South Africa and Colombia. WCY is among eight competitiveness reports monitored by government. The Philippines has notched gains in Heritage Foundation’s 2014 Index of Economic Freedom (97th to 89th out of 178), the World Economic Forum’s Global Enabling Trade Report 2014 (72nd to 64th out of 138) and Global Information Technology Report 2014 (86th to 78th out of 148).