The huge growth of Metro Manila has been spurred by economic reform and increased foreign direct investment

pread over an archipelago of more than 7,000 islands in the South West Pacific, the Philippines was just a few short years ago saddled with anaemic economic growth and political instability that led to the impeachment of President Joseph Estrada, and his eventual overthrow.

Vice President Gloria Macapagal-Arroyo was sworn in as his replacement in January 2001 and elected to the Presidency in 2004. She has since shown her ability to turn the country around and her reforms have spurred the fastest economic growth in three decades, along with falling inflation, rising employment and increased foreign direct investment.

Philippine companies in the banking, real estate and energy sectors have rung up record profits as the president, her ministers, legislators and the country’s central bank have all contributed to the country’s rapid recovery and to the ongoing improvement in living standards for Filipinos.

The economy expanded by 7.3% in 2007, boosted by falling interest rates, a real estate boom and an increase in remittances from Overseas Filipino Workers (OFWs). It is expected to grow at between 6.3-7% this year, as a result of the economic slowdown in the U.S.

Tax reforms carried out in 2005 and 2006 have boosted government revenue and permitted spending on education, infrastructure and healthcare to rise. Forecasts predicting a balanced budget this year are being revised due to the threat of global recession and decreased agricultural production at home due to climate change. President Macapagal-Arroyo has said that the Philippines is well-positioned to weather a global economic slowdown, as a result of its total economic overhaul.
“Seven years ago, nobody thought we could do it, but we have and we are continuing the pace of progress that has made our economy so strong,” she said. “This new maturity in our economy has brought a new confidence that forms the foundation of sustained economic growth moving forward.”

The country’s businessmen are just as bullish about the economy as the president. Real estate companies such as Filinvest Land and Robinsons Land expect continued demand for new housing and are investing accordingly. Banks including Banco de Oro and Metrobank expect to profit from mortgages and other lending associated with the building boom. The president and the legislative branch are working closely together to pass much-needed reforms intended to make the country’s government and private sector more efficient and competitive.

The Philippines has also improved its international situation. It has friendly relations with its neighbors and is attracting more foreign direct investment from globally leading companies including Hanjin of Korea, Marubeni and Tokyo Electric of Japan and Texas Instruments of the U.S.

Foreign companies are attracted by the Philippines’ English-speaking workforce, low wage costs, and for U.S. companies, by the historical and cultural ties between the two countries. The country has other advantages as well, says Willy C. Gaa, the Philippines’ ambassador to the U.S.

“We likewise have a solid legal infrastructure that makes our legal system predictable and reliable for businessmen,” he explained. “Despite the excellent quality and high productivity of the Filipino workforce, the Philippine wage structure is competitive vis-a-vis wage rates in the region.”

The country maintains strong diplomatic ties with the U.S., its biggest trading partner. They cooperate on security and military matters, and the Philippines has been an important partner in the U.S.-led fight against terrorism.

The presence of a large community of Filipinos in the U.S. also helps cement relations between the countries. OFWs in the U.S. send home 60% of all remittances, helping their families and friends save, buy homes and invest in new businesses. Filipinos are the second-largest Asian-American group, numbering some 4 million.

The Philippines, meanwhile, is becoming increasingly popular with U.S. tourists. Last year around 400,000 Americans visited the Philippines to enjoy its jungles, mountains and beaches. The government has embarked on a program to attract even more this year to top destinations including Boracay beach, which has consistently been voted one of the world’s top 5 beaches.