THE PHILIPPINES, along with other Southeast Asian countries, saw domestic engines drive economic growth as external demand faltered, Standard Chartered said on Friday.

“ASEAN (Association of Southeast Asian) countries — particularly Indonesia, the Philippines and Malaysia — have continued to grow close to or above trend growth in recent years, despite poor external conditions,” the bank said in a report.

Populations in these countries are growing more affluent, it added, and healthy state finances and political environments have also created a buffer.

For the Philippines, Standard Chartered said household consumption accounted for bulk of economic activity at 68% of gross domestic product (GDP) in the first quarter.

“Comparing the amount of consumer goods imports with total imports, we find that the Philippines has the highest proportion of consumer-goods imports,” it added.

“Because domestic consumption contributes a larger share of growth, consumer goods make up a larger share of import content. This is particularly the case for the Philippines.”

Investment is also increasing its share in economic activity in the Philippines as well as Malaysia, Standard Chartered said, reflecting buoyant investor sentiment and government efforts to secure country upgrades.

“Given the government’s current investment drive, we expect the Philippines to import even more capital goods as investment growth accelerates over the next few years,” it added.

As the affluence in Southeast Asian countries rises, meanwhile, their consumer spending patterns will also change.

The bank said spending on lower-value items such as food declines when the economy develops. For example, food consumption in the Philippines accounts for 39%, well above South Korea’s 13.6%.

“Marginal increases in food demand get smaller as incomes rise, and spending on higher-value items such as housing rises proportionally… In addition, spending on transport and recreation tends to increase in absolute terms as incomes rise.”

The Philippine economy grew by a surprising 7.8% in the first quarter, beating market expectations as well as the government’s target of 6-7% for this year. – See more at: