PHL will be Asia's youngest nation in next 40 years – IMF official

The Philippines is expected to be the youngest nation in Asia in 40 years' time, and must diversify its manufacturing and service sector to unlock the workforce's productivity potential if it wants to sustain strong economic growth, an official of the International Monetary Fund (IMF) said.

More young people will join the labor force in the next three to four decades, IMF resident representative Shanaka Peiris said during his welcome remarks at the Economic Journalists Association of the Philippines (EJAP) Business Awards in Makati City last Friday.

"In the next 30 to 40 years, the Philippines is going to be the youngest nation in Asia. That's a huge opportunity... not only because we are young, but it's also because others are going to be old, especially our neighbors in Asia," he said.

"That's a big opportunity. But that alone will not be enough because a demographic dividend would need jobs. We have to create the jobs," he added.

A country's productivity is a large part of moving up the value chain and improving the lives and incomes of its citizens.

"Even though the Philippines story has been good in the last 10 years, something very striking has been domestic-led," Peiris said.

The Philippine economy has a growth rate of between 5 to 5.5 percent over the past decade, British banking giant HongKong Shanghai Banking Corporation (HSBC) Limited.

While employment has improved, unemployment remains at 6.7 percent in July 2014, compared with the 7.3 percent rate a year earlier.

To stir productivity, the Philippines must diversify its economic pillars—the manufacturing and service sectors—to create more jobs, the IMF official said.

"The question is, can we diversify? It should not only be in manufacturing but also including services," he said.

"We have natural resources like human capital, which are the educated young people. We have good prospects in the service sector in Asia and globally," he said.

"We have 7,000 islands... We have mining resources, controversial but with potential," he added.

Peiris said these can be unlocked by more investments from the private sector, both local and foreign.

"We need the private investment to fall in line. We need the demographic dividend by creating jobs. That's where we need to diversify the economic sector. And also addressing some of the bottlenecks," he added. — BM, GMA News