The Philippine economy is showing a remarkable improvement and continuing economic reforms under the administration of President Gloria Macapagal Arroyo.
In 2007, the Philippine economy experienced its best performance in 30 years, recording 7.2% GDP growth, as well as increases to "positive growth" in all sectors of the economy, led by services and industries. The Philippines continued to grow at 4.6 percent in 2008 and posted 1.5 percent GDP growth for the 2nd quarter of 2009.
In August 2009, the National Economic Development Authority (NEDA) announced that the Philippines is “now out of threats of recession”, noting that both the U.S. and the EU are moving out of recession. Public spending also increased by 10%, due mainly to record amounts of overseas remittances – that have exponentially increased through the years.
The Philippines is the fourth-largest remittance economy in the world after India, China and Mexico. In 2008, remittance flows to the Philippines amounted to $16.4 billion, up 13.7 percent from 2007 and above the Bangko Sentral ng Pilipinas’ (BSP / Central Bank) growth forecast of 13 percent or $16.3 billion for the year. Remittance flows contributes about 10 percent to the country’s GDP.
The Philippine Overseas Employment Administration (POEA), the focal institution managing the huge Filipino migration, reported that the number of Filipinos deployed abroad in 2008 rose considerably by 27.8 percent to 1,376,823, from 1,077,623 in 2007.
To date, it is estimated that over 10% of the Philippine population are living and working in over 140 countries. They are employed as doctors and nurses, accountants, IT professionals, construction workers, domestic helpers, technicians, engineers, architects and as military servicemen. Over one third are unskilled workers, typically domestic helpers or employed in the retail, hospitality, and food & beverage industries.
Filipinos are to be found across North America, the Middle East, Europe and Asia-Pacific. In the US alone there are over four million Filipinos, with a further two million in Saudi Arabia. There are 11 million Filipinos abroad; eight million of whom are Overseas Filipino Workers (OFWs).
Another driver of economic growth is the services sector, particularly the Business Processing Outsourcing (BPO) which is the fastest growing segment in the Philippine economy. As of 2008, the BPO segment is a $6 billion industry, representing 3.5 percent of GDP and 10 percent of the global outsourcing market.
The country’s economic indicators are all encouraging as presented by the Bangko Sentral ng Pilipinas (Central Bank of the Philippines) in its 2007 Annual Report: “Continuing economic reforms coupled with macroeconomic prudence led to broad-based economic growth and lifted market confidence, including investor sentiment. The growing demand for Philippine goods and services in international markets propelled exports while strong domestic consumption was sustained during the year.”
The United States, Japan and China/Hong Kong were the top three destinations for Philippine exports in 2008. Top Philippine exports are in electronics, mineral products, fashion garments, and agri-based products.
The United States is the largest source of Foreign Direct Investments (FDIs) in 2008, with total investments amounting to $241 million.
The country’s overall Balance of Payments (BOP) in 2008 registered a surplus of US$2.2 billion.
The country’s impressive economic performance since 2001 reflects the Philippine Government's sustained efforts on fiscal management and good governance. It has maintained fiscal discipline and recently increased spending on the social sectors, agriculture and infrastructure.
The Philippine economy has also demonstrated resilience in the manufacturing sector, particularly in automotive parts, food processing, electronics, garments, and textiles.
The Philippine Tourism is a $5 billion industry.
Mining is potentially one of the biggest industries in the Philippines as the country is rich in chromite, copper and nickel. In addition to its coal reserves, natural gas has recently been discovered in the Palawan islands.
The Philippines is a world leader in renewable energy sources. It has considerable hydroelectric generation facilities, and has created the world’s first commercial scale geothermal energy installation – the second largest producer of geothermal energy in the world after the United States. Around a quarter of the Philippine energy is generated from underground heat sources.
The Philippine economy’s resilience is a testament to the tough choices that the Government has made, together with Congress, several years ago. Economic reform has been the central pillar of President Arroyo’s Administration.
The 2009 World Bank report on World Governance Indicators recently showed the Philippines’ continuing improvement in the following indicators: Rule of Law, Government Effectiveness, Regulatory Quality, and Control of Corruption.
The Philippine Government’s priority is implementing the pro-poor and governance reform agendas that have given the Philippines its strongest and most resilient economy in decades.
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To sustain the favorable economic momentum, the Philippine Government continues to pursue aggressive measures which include:
- Realigning the national budget to spend more on social services;
- Improving the infrastructure network;
- Eliminating regulatory capture in the bureaucracy;
- Boosting and diversifying exports and expanding their markets;
- Raising agricultural productivity;
- Strengthening micro, small and medium-sized enterprises;
- Supporting mass housing;
- Protecting the environment; and
- Eradicating terrorism
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Annual data
2008(a)
Historical averages (%)
2004-08
Population (m)
92.7
Population growth
1.8
GDP (US$ bn; market exchange rate)
166.9(b)
Real GDP growth
5.5
GDP (US$ bn; purchasing power parity)
317.4
Real domestic demand growth
5.0
GDP per head (US$; market exchange rate)
1,801
Inflation
6.4
GDP per head (US$; purchasing power parity)
3,425
Current-account balance (% of GDP)
3.2
Exchange rate (av) P:US$
44.5(b)
FDI inflows (% of GDP)
1.6
(a) Economist Intelligence Unit estimates. (b) Actual.
Major exports 2008
US$ bn
Major imports 2008
US$ bn
Electronic products
58.1
Electronic parts
16.4
Mineral products
5.1
Telecommunications equipment & electrical machines
14.8
Garments
4.0
Crude petroleum
13.2
Petroleum products
2.5
Food
8.4
Agriculture-based products
2.1
Chemicals
7.1
Leading markets 2008
% of total
Leading suppliers 2008
% of total
US
16.9
Japan
18.3
Japan
16.4
US
15.2
Hong Kong
12.0
Singapore
13.8
China
11.2
Saudi Arabia
7.7
Singapore
9.6
China
7.1
Key indicators
2008
2009
2010
2011
2012
2013
Real GDP growth (%)
3.8
-1.8
3.0
5.2
5.3
5.6
Consumer price inflation (av; %)
9.3
2.9
3.6
4.2
4.0
4.0
Budget balance (% of GDP)
-0.9
-3.4
-2.4
-1.9
-1.4
-1.2
Current-account balance (% of GDP)
2.5
3.8
2.8
3.1
3.8
4.1
Lending rate (av; %)
8.8
8.5
8.6
9.2
9.4
9.6
Exchange rate P:US$ (av)
44.47
49.50
52.00
51.80
51.20
49.00
Exchange rate P:US$ (end-period)
47.49
50.75
51.90
51.50
50.10
47.90
(source: the Economist Intelligence Unit, the Economist Magazine)
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