Comeback Trail: For Philippine Economy, Harsh Remedies Pay Off; President's Tax Hikes Lure Foreign Investors; Risk of Global Crunch
MANILA, Philippines -- The perpetual sick man of Asia is making an unexpected recovery.</br></br>Once among Asia's most prosperous nations, the Philippines had languished economically for decades while neighboring countries, big and small, raced ahead. But for the past two years -- almost lost amid the international excitement about the growth of China, India and Vietnam -- the Philippines has been rebounding.</br></br>This year, the nation's economy is expected to post its fastest growth rate since the early 1990s, despite the economic shadow cast by the global credit squeeze sparked by problems in the U.S. mortgage market. The Philippine economy grew at a 7.5% annual rate in the second quarter. The stock market has soared over the past two years, although it has faltered recently. Foreign investors are coming back, attracted by the Philippines' young population -- the average age of its 89 million people is 22 -- and the widespread use of English, a legacy of its past as an American colony. The call-center business is thriving, some of it poached from India.</br></br>Not long ago, Fort Bonifacio, a sprawling old military base in the heart of Manila, was an emblem of economic malaise -- a stalled redevelopment taken over by cyclists, skateboarders and kite enthusiasts. Now, office towers, embassy buildings and shopping malls are going up there. Nike Inc., Starbucks Corp. and Nokia Corp. have opened stores, and the Manila stock exchange will be joining them soon.</br></br>"The Philippines could be the next India in terms of its ability to surprise," says Adrian Mowat, a stock strategist at J.P. Morgan Securities Ltd. in Hong Kong.