IMD report flags PHL risks in prices, food

WHILE the Philippines’s overall ranking in the 2024 IMD World Competitiveness Ranking did not change, the annual report cited high prices of goods and food security as some of the challenges to watch out for this year. 

Based on the 2024 IMD World Competitiveness Ranking, the Philippines ranked 52nd out of the 67 economies surveyed. The country’s ranking did not change, compared to last year’s. 

However, the annual report of IMD outlined the challenges that may hound the country this year, particularly on keeping prices

affordable, improving the education system, reducing climate change vulnerability, among others. 

The IMD report also noted that the country may have a hard time resolving its territorial rights to the West Philippine Sea “diplomatically

and peacefully.” 

The IMD World Competitiveness Ranking divides its data into four areas: economic performance, government efficiency, business efficiency and infrastructure. 

“Together, they capture various aspects of competitiveness, such as macroeconomic stability, fiscal policy, institutional quality, market openness, business dynamism, innovation, education, health, and environmental performance,” the IMD report explained. 

To illustrate the competitiveness landscape in the Philippines for 2024, the country ranked 40th in terms of economic performance. Its ranking here remains unchanged compared to last year’s. On government efficiency, the Philippines improved as it climbed three spots from last year’s 52nd to this year’s 49th.

On business efficiency, the country went down three notches from last year’s 40th to this year’s 43rd spot. In terms of infrastructure, the Philippines slipped three rungs from last year’s 58th spot to this year’s 61st. 

Zooming in on the sub-pillars of the Economic Performance of the Philippines, it improved in domestic economy, international trade and international investment. In contrast, it performed poorly in employment and prices, as its rankings in these areas declined.

On government efficiency, the country improved its performance in public finance, institutional framework, while its ranking declined in terms of tax policy, business legislation and societal framework. 

In the area of business efficiency, the country solely improved in productivity and efficiency while its ranking in labor market, finance, management practices, attitudes and values declined.

On infrastructure, the country’s ranking in four sub-pillars—basic infrastructure, technological infrastructure, scientific infrastructure and education—declined, while its ranking did not change in the area of health and environment. 

Arturo Bris, Director of the IMD World Competitiveness Center (WCC) underscored that “the most competitive economies of the future will be those able to anticipate and adapt to this changing global context while simultaneously creating value and well-being for their people. And that will make them sustainable.” 

He also noted that the major competitiveness challenges for the world’s economies in 2024 and beyond were transitioning to a low-carbon and circular economy, being mindful of emerging markets’ “increasing integration” into the world economy, and keeping up with digital transformation. 

According to IMD, the three trends that survey respondents consider as having the “greatest impact” on businesses in 2024 were: AI adoption, with 55.1 percent;  the risk of a global economic slowdown, 52 percent; and geopolitical conflicts, 36.1 percent. 

Through the Philippine government’s lens, the Department of Trade and Industry (DTI) told the BusinessMirror in a Viber message on Tuesday that it “remains committed to fostering a business-friendly environment and driving economic development.”

The country’s Trade department said it intends to focus on “enhancing manufacturing with Industry 4.0 technologies and fostering innovation to boost production efficiency and global competitiveness.” 

On addressing key challenges, DTI recognized sustainable infrastructure as “vital” for enhancing  competitiveness and mitigating climate change.

“We are dedicated to transform the Philippines into an attractive investment destination, boosting jobs and exports, and maintaining a positive trade balance. This comes with upskilling our workforce to meet the evolving demands of the job market,” said the DTI. 

“Through collective efforts and strategic initiatives, we are committed to positioning the Philippines as a leading hub for competitive and sustainable businesses in Southeast Asia, ensuring a prosperous future for all Filipinos,” the DTI said.

IMD explained the importance of competitiveness ranking thus: “An economy’s competitiveness cannot be reduced to just its [gross domestic product] GDP and productivity; political, social and cultural dimensions are a reality for enterprises, too.” 

“Governments play a crucial role, by providing an environment characterized by efficient infrastructure, institutions, and policies that can encourage sustainable value creation on the part of enterprises,” said the Switzerland-based independent academic institute.

Image credits: Bernard Testa