The Philippines and India will become the leading drivers of global economic growth in the next decade, surpassing China, according to an Oxford Economics study. Louis Kuijs, author of the study, said both the Philippines and India are still relatively poor countries, which means there is a huge potential for them to catch up. The Philippines’ per capita GDP is nearly one-third of China’s, while India’s per capita GDP is almost one-fourth of China’s. The two countries have yet to reach the “middle income trap” (where economic growth slows down as an emerging market economy achieves middle income) and the “Lewis point” (where an emerging market economy runs out of cheap labor), which China has already faced.
Kuijs said both countries have in recent decades put in place the minimum set of fundamentals, in terms of economic setting, to promote decent saving to finance investment and respectable productivity growth, achieved through urbanization and urban job creation, in part from manufacturing growth. The Oxford Economics study’s prediction regarding the Philippines and India is in line with an earlier McKinsey Global Institute study, which identified the Philippines and India as being among the few emerging market economies that are well prepared to achieve sustained growth in the next decade.