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Economy of the Philippines

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Economy of the Philippines
File:Metro Manila in 2010.jpg
From Pasay City overlooking Ortigas & Makati CBDs, Metro Manila
CurrencyPhilippine peso (PHP) = 100 centavos (English)
piso = 100 sentimo (Filipino)
Calendar year
Trade organizations
APEC, ASEAN, WTO, and others
Statistics
GDP$189.1 billion (2010 est.)[1] (nominal 46th) $350.2 billion (2010 est.)[1] (PPP 33rd)
GDP growth
7.3% (2010)[2]
GDP per capita
$2,011 (2010 est.)[3] (nominal 122nd)
$3,725 (2010 est.)[3] (PPP 125th)
GDP by sector
agriculture (14.9%), industry (29.9%), services (55.1%) (2009 est.)[1]
3.0% (November 2010)[4]
Population below poverty line
national – 32.9% (2006 est.)[1]
international – 22.6% (2006)[5]
regional – 27% (2006)[6]
45.8 (2006)[1]
Labor force
37.89 million (2009 est.)[1]
Labor force by occupation
services (51%) agriculture (34%), industry (15%) (2009 est.)[1]
Unemployment6.9% (July 2010)[7]
Main industries
electronics assembly, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing[1]
External
Exports$50 billion (2010 est.)[1]
Export goods
semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits[1]
Main export partners
United States 15.35%, Japan 14.19%, China 13.19%, Singapore 9.44%, Hong Kong 9%, South Korea 5.12%, Germany 4.1% (2009)[1]
Imports$46.39 billion (2009 est.)[1]
Import goods
electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic[1]
Main import partners
Japan 15.32%, United States 11.47%, Singapore 9.54%, China 8.93%, Taiwan 8.27% (2009)[1]
$55.416 billion (1st Quarter, 2010)[8]
Public finances
$94.27 billion (58.7% of GDP) (2009 est.)
Revenues$23.56 billion
Expenses$29.82 billion (2009 est.)[1]
Economic aid$561.7 million ODA recipient. (2007)[citation needed]
All values, unless otherwise stated, are in US dollars.


The economy of the Philippines is the 4th largest economy in South East Asia and the 35th largest economy in the world by purchasing power parity according to the World Bank in 2009. A newly industrialized emerging market economy, it posted a real GDP growth rate of 5.3% in 2006 and 7.1% in 2007. Growth slowed to 3.8% in 2008 as a result of the global financial crisis. In 2009, the real growth rate was 0.9%.[1][9] The Philippine economy grew by 7.3% in 2010, which several reports described as the fastest growth in 24 years.[3]

A mixed economic system, important sectors of Philippine industry include food processing, textiles and garments, and electronics and automobile parts. Most industries are concentrated in the urban areas around Metro Manila, while Metro Cebu is also becoming an attraction for foreign and local investors. Mining also has great potential in the Philippines, which possesses significant reserves of chromite, nickel, and copper. Recent natural gas finds off the islands of Palawan add to the country's geothermal, hydro, coal, and oil exploration energy reserves.

History

Initially a fast growing economy, the Philippines was at one time one of the richest countries in East Asia before slowing into a period of chronic underperformance. The factors behind the slow growth are complex but it is thought that contributing to it were the adoption of import substitution policies over export-oriented ones, slow implementation of agrarian reform, and the lack of investment in infrastructure.[10][11] In recent years, however, attempts to reach the 7% growth threshold, a point at which it is thought the public will be able to more noticeably feel economic gains, have started becoming more successful.

During the regime of Ferdinand Marcos, the economy initially grew close to the earlier trend but eventually slowed considerably and even turned negative destabilized by allegations of corruption and political uncertainty and unrest. By the time of the People Power revolution, the economy had declined, falling severely below the growth of other nations in Southeast Asia. A severe recession in 1984-85 saw the economy shrink by more than 10%. Despite initial optimism, continued perceptions of political instability dogged the succeeding incompetent Corazon Aquino administration and daily blackouts in its later years further damped economic activity. Fidel V. Ramos restored electricity and managed to briefly uplift the economy during his term as president, posting modest but positive GDP growth rates.

In 1998, the Philippine economy deteriorated again as a result of spill over from the Asian financial crisis, although not as much as other Asian nations, and a wave of natural disasters also dragged the economy down. Growth fell to about -0.6% in 1998 from 5.2% in 1997, but recovered to 3.4% by 1999. President Joseph Estrada attempted to resist protectionist measures, and efforts to continue the reforms begun by the Ramos administration made significant progress. A major bank failure in April 2000 and the political disturbances following the impeachment and subsequent departure of President Estrada in the beginning of 2001 led to lower growth.

The administration under President Gloria Macapagal-Arroyo pushed toward faster economic growth. Arroyo's stance towards economic improvement since 2004 has seen the Philippines re-emerge as one of the growing economies in Southeast Asia. In 2004, the Philippine economy grew by 6.1%, beating most analysts and even the government's estimates. In 2005, the Philippine peso posted an appreciation rate of 6%—the fastest in the Asian region for that year. However, higher oil prices led to growth amounting to 5.1%. The Philippines is still faced with the challenge of generating income internally. In comparison to other countries, it relies disproportionately on remittances from overseas which are equivalent to around 11.17% of GDP.[12] During 2006, the economy posted a 5.4% growth, dampened by two typhoons which wreaked havoc on the agricultural sector.

The local stock market hit a record high on June 1, 2007[citation needed] while the peso was trading at around PHP 41.31 to a US dollar, making it then Asia's best performing currency by sharply appreciating nearly 19%.[13]

GDP in 2007 grew 7.3%, the fastest in 31 years: its economy grew a seasonally adjusted 1.8%, faster than expected in the 4th quarter while inflation was tamed at 2.8% amidst sharp increases in oil prices.[14]

Growth slowed in 2008 and 2009 as the spillover effects of global economic weakness from the Late-2000s recession affected the country. In 2009, the nominal GNP per capita was US$1,746 and the PPP GNP per capita was $3,521. The total nominal GNP was $167 billion and the total PPP GNP was $320 billion.

In 2010, the PSEI has surpassed pre-Asian Financial Crisis levels and growth of 7% is being seen. For the 1st Quarter of 2010, the Philippines has experienced growth of 7.3%. As of November 2010, the Philippine peso is trading at around 44:1 US dollar.[15]

As of November 2010, the Philippines ranks 26th in terms of foreign exchange reserves with $61.3 billion, ahead of Canada, Argentina, Norway and Sweden.

In December 2010, AOL's finance site, Daily Finance, proclaimed the Philippine Stock Exchange as the year's best performing stock market in the world.[16]

Macro-economic trend

A chart of selected statistics showing trends in the gross domestic product of the Philippines using data taken from the International Monetary Fund.[9][17]

Year GDP
in millions of PHP
(current prices)		 PHP:US$ Implied PPP
PHP:US$
(current)		 GDP per capita
as % of US
(current prices)
1980 243,749 7.51 4.044 5.48
1985 571,883 18.60 7.902 3.18
1990 1,074,510 24.32 9.975 3.1
1995 1,905,951 25.23 14.076 3.97
2000 3,354,727 44.19 18.789 2.8
2005 5,444,038 55.09 21.755 2.72
2006 6,031,164 51.31 22.158 3.01
2007 6,647,338 46.01 22.172 3.48
2008 7,423,213 44.32 23.346 3.91
2009 7,669,143 47.64 23.620 3.76

GDP growth at constant 1985 prices in Philippine pesos:[3][9][18]

Year 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989
GDP growth % 4.6 4.9 4.8 9.2 5 6.4 8 5.6 5.2 5.6 5.149 3.423 3.619 1.875 -7.324 -7.307 3.417 4.312 6.753 6.205
Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GDP growth % 3.037 -0.578 0.338 2.116 4.388 4.679 5.846 5.185 -0.577 3.396 5.968 1.756 4.449 4.93 6.38 4.952 5.341 7.079 3.839 0.918 7.3

Government budget

The proposed national government budget for 2011 has set the following budget allocations[19]

Budget Allocation Millions of Pesos
(PHP)		 Millions of US Dollars
(US$)
Department of Education 207,300 4,573
Department of Public Works and Highways 110,600 2,439.8
Department of National Defense 104,700 2,309.7
Department of Interior and Local Government 88,200 1,945.7
Department of Agriculture 37,700 831.7
Department of Social Welfare and Development 34,300 756.7
Department of Health 33,300 734.6
Department of Transportation and Communications 32,300 712.5
State Universities and Colleges 23,400 516.2

Private sector

As a newly industrialized nation, the Philippines is still an economy with a large agricultural sector, however services are beginning to dominate ASEAN. Much of the industrial sector is based on manufacturing electronics and other high-tech components, usually from foreign multinational corporations.

File:Monument To Immortality.jpg
Philippine Stock Exchange in Makati
Filipino exports in 2006

Industrial production is centered on processing and assembly operations. The Philippines currently hosts the International Rice Research Institute (IRRI), which studies high yielding rice varieties. It has played a key role in the Green Soil Revolution and was able to increase rice yields and rice production during the 1970s.[20]

Automotive

The ABS used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. Ford, Toyota, Mitsubishi, and Nissan are the most prominent automakers manufacturing cars in the country. A 2003 Canadian market research report predicted that further more investments in this sector were expected to grow in the following years. Toyota sells the most vehicles in the country.[21]

Electronics

Intel has been in the Philippines for 28 years as a major producer of products including the Pentium 4 processor. A Texas Instruments plant in Baguio has been operating for 20 years and is the largest producer of DSP chips in the world.[22] Texas Instruments' Baguio plant produces all the chips used in Nokia cell phones and 80% of chips used in Ericsson cell phones in the world.[citation needed] Until 2005, Toshiba laptops were produced in Santa Rosa, Laguna. Presently the Philippine plant's focus is in the production of hard disk drives. Printer manufacturer Lexmark has a factory in Mactan in the Cebu region.

Outsourcing

Main article: Business process outsourcing in the Philippines

According to an IBM Global Location Trends Annual Report, as of December 2010 the Philippines has overtaken India as the world leader in business support functions such as shares services and business process outsourcing.[23][24] The majority of the top ten BPO firms of the United States operate in the Philippines. Total jobs in the industry grew to 100,000 and total revenues are placed at $960 million for 2005. BPO facilities are mainly in Metro Manila and Cebu City although other regional areas such as Baguio City, Bacolod City, Cagayan de Oro, Tacloban City, Clark (Angeles City), Dagupan City, Davao City, Dumaguete City, Lipa City, Iloilo City and Legazpi City are now being promoted and developed for offshore operations.

File:Asiatown IT Park.jpg
Asiatown IT Park in Cebu

Mining and natural resources

Geothermal power station in Negros Oriental.

The country is rich with mineral and geothermal energy resources. In 2003, it produced 1931 MW of electricity from geothermal sources (27% of total electricity production), second only to the United States,[25] and a recent discovery of natural gas reserves in the Malampaya oil fields off the island of Palawan is already being used to generate electricity in three gas-powered plants. Philippine gold, nickel, copper and chromite deposits are among the largest in the world. Other important minerals include silver, coal, gypsum, and sulfur. Significant deposits of clay, limestone, marble, silica, and phosphate exist. About 60% of total mining production are accounted for by non-metallic minerals, which contributed substantially to the industry's steady output growth between 1993 and 1998, with the value of production growing 58%. In 1999, however, mineral production declined 16% to $793 million. Mineral exports have generally slowed since 1996. Led by copper cathodes, Philippine mineral exports amounted to $650 million in 2000, barely up from 1999 levels. Low metal prices, high production costs, lack of investment in infrastructure, and a challenge to the new mining law have contributed to the mining industry's overall decline.

The Philippine Airlines is Asia's first commercial airline

The industry rebounded starting in late 2004 when the Supreme Court upheld the constitutionality of an important law permitting foreign ownership of Philippines mining companies.[citation needed] However, the DENR has yet to approve the revised Department Administrative Order (DAO) that will provide the Implementing Rules and Regulations of the Financial and Technical Assistance Agreement (FTAA), the specific part of the 1994 Mining Act that allows 100% foreign ownership of Philippines mines.[citation needed]

Transportation

Main article: Transportation in the Philippines

Transport of people, goods and services in the country is done mostly by motorized vehicles, boats and planes. Land transportation vehicles are mostly imported; jeepneys and tricycles are usually locally manufactured.

Statistics

Percentage of population in 2007 living below poverty line, by province. Provinces with darker shades have more people living below the poverty line.
Economic Growth[2][26][27]
Year % GDP % GNP
2000 4.5 4.8
2001 3.2 3.4
2002 4.6 5.2
2003 4.7 5.6
2004 6.0 6.2
2005 5.0 5.6
2006 5.4 6.2
2007 7.1 7.8
2008 3.8 6.2
2009 1.1 4.0
2010 7.3 8.0
* Computed at Constant 1985 Prices
** Source: NEDA and NSCB

Most of the following statistics are sourced from the CIA World Factbook - Philippines page retrieved on May 15, 2010 (currency is US dollars except where otherwise indicated).

  • Exports: $50 billion (2010 est.)Cite error: The <ref> tag has too many names (see the help page).
  • GDP - purchasing power parity: $324.4 billion (2009 est.)[1]
  • GDP - real growth rate: 7.3 % (2010)
  • GDP PPP: $350.2 billion (2010)
  • GDP per capita purchasing power parity: $3,300 (2009 est. in 2009 US dollars)
  • GDP nominal: $189.1 billion (2010)
  • GDP per capita: $1,746[1]
  • GDP - composition by sector:
    agriculture: 14.9%
    industry: 29.9%
    services: 55.1% (2009 est.)[1]
  • Population below poverty line: [1] 32.9% (2006 est.) [1]
  • Household income or consumption by percentage share:
    lowest 10%: 2.4%
    highest 10%: 31.2% (2006)[1]
  • Inflation rate (consumer prices): 3.3% (2009 est.),[1] 3.5% (September 2010)[4]
  • Labor force: 37.89 million (2009 est.)[1]
  • Labor force by occupation:
    agriculture 34%
    industry 15%
    services 51% (2009 est.)[1]
  • Unemployment rate: 6.9% (July 2010)[7]
  • Budget:
    revenues: $23.56 billion (2009 est.)[1]
    expenditures: $29.82 billion (2009 est.)[1]
  • Industries: electronics assembly, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing
  • Industrial production growth rate: -2% (2009 est.)[1]
  • Electricity - production: 56.57 billion kWh (2007 est.)[1]
  • Electricity - consumption: 48.96 billion kWh (2007 est.)[1]
  • Electricity - exports: 0 kWh (2007)[1]
  • Electricity - imports: 0 kWh (2007)[1]
  • Agriculture - products: sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, mangoes; pork, eggs, beef; fish[1]
  • Exports: $37.51 billion (2009 est.); $48.25 billion (2008 est.)[1]
  • Exports - commodities: semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits[1]
  • Exports - partners: United States 15.35%, Japan 14.19%, China 13.19%, Singapore 9.44%, Hong Kong 9%, South Korea 5.12%, Germany 4.1% (2009)[1]
  • Imports: $45.39 billion (2009 est.)[1]
  • Imports - commodities: electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic[1]
  • Imports - partners: Japan 15.32%, United States 11.47%, Singapore 9.54%, China 8.93%, Taiwan 8.27% (2009)[1]
  • Debt - external: $53.14 billion (30 September 2009 est.)[1]
  • Currency: 1 Philippine peso (P) = 100 centavos
  • Exchange rates: Philippine pesos (PHP) per US dollar - 47.8 (2009), 44.439 (2008), 46.148 (2007), 51.246 (2006), 55.086 (2005)[1]

See also

References

  1. ^ a b c d e f g h i j k l m n o p q r s t u v w x y z aa ab ac ad ae af ag ah ai aj ak al am an ao CIA World Factbook, Philippines, Retrieved 15 May 2009
  2. ^ a b National Economic and Development Authority (NEDA), Republic of the Philippines. (January 31, 2011). Annual GDP Sizzled to its Highest Growth Rate in the Post Marcos Era at 7.3 Percent; Q4 2010 GDP grew by 7.1 percent
  3. ^ a b c d International Monetary Fund. (October 2010). World Economic Outlook Data, By Country – Philippines: [selected annual data for 1980–2015]. Retrieved 2011-01-31 from the World Economic Outlook Database.
  4. ^ a b National Statistics Office, Republic of the Philippines. (2010-10-05). "Consumer Price Index September 2010". Retrieved 2010-09-30.
  5. ^ "18. Poverty and inequality", Statistical Yearbook for Asia and the Pacific 2009, United Nations – Economic and Social Commission for Asia and the Pacific, March 24, 2010 (Table 18.1). {{citation}}: Unknown parameter |separator= ignored (help)CS1 maint: postscript (link)
  6. ^ Dumlao, Doris. (August 27, 2008). 23 million Filipinos living below Asia-Pacific poverty line. The Philippine Daily Inquirer.
  7. ^ a b National Statistics Office, Republic of the Philippines. (2010-09-15). "Employment Rate Estimated at 93.1% in July 2010". Retrieved 2010-09-30.
  8. ^ Economic and Financial Data for the Philippines. (September 24, 2010). Bangko Sentral ng Pilipinas. Retrieved September 27, 2010.
  9. ^ a b c International Monetary Fund. (April 2010). World Economic Outlook Data, By Country – Philippines: [selected annual data for 1980–2015]. Retrieved 2010-05-29 from the World Economic Outlook Database.
  10. ^ Villegas, Bernardo.(August 25, 2009). Why is the Philippines still poor?. The Philippine Daily Inquirer. Retrieved November 28, 2010.
  11. ^ Dolan, Ronald E. (Ed.). (1991). "The Economy". Philippines: A Country Study. Washington: GPO for the Library of Congress. Retrieved 2010-11-27 from Country Studies US Website.
  12. ^ Data – By Country – Philippines – Download Data. (n.d.). World Bank. Retrieved September 27, 2010.
  13. ^ Doris Dumlao. (12/13/2007). Peso defies regional decline, hits 41.31:$1. The Philippine Daily Inquirer.
  14. ^ Economy grew 7.3% in 2007, fastest in 31 years. (2008-01-31). The Philippine Daily Inquirer. Retrieved 2010-07-19.
  15. ^ Oanda.com. Currency Converter. Retrieved November 22, 2010.
  16. ^ Burrows, Dan (December 29, 2010). [1]. "Daily Finance".
  17. ^ International Monetary Fund. (April 2010). "World Economic Outlook (WEO) Database April 2010 – Report for Selected Countries and Subjects – Philippines and United States".
  18. ^ International Monetary Fund. (April 2002). "The World Economic Outlook (WEO) Database April 2002 – Real Gross Domestic Product (annual percent change) – All countries".
  19. ^ "President Aquino's 2011 Budget Message". Retrieved 2010-08-24. {{cite web}}: Cite has empty unknown parameters: |month= and |coauthors= (help)
  20. ^ "Rough Rice Production by country and geographical region 1961-2004" (PDF). International Rice Research Institute. Archived from the original (PDF) on 2006-09-28. Retrieved 2006-08-27. {{cite web}}: Cite has empty unknown parameters: |month= and |coauthors= (help)
  21. ^ Oslowski, Justin. (March 25, 2003). "Automotive Production in the Philippines". Industry Canada. Archived from the original on 2007-12-08. Retrieved 2007-12-11.
  22. ^ The positive outlook to the Philippines, philnews.com, retrieved 2007-12-11
  23. ^ IBM Global Business Services. (October 2010). Global Location Trends – 2010 Annual Report.
  24. ^ Balana, Cynthia D. and Lawrence de Guzman. (December 5, 2010). It's official: Philippines bests India as No. 1 in BPO. The Philippine Daily Inquirer.
  25. ^ Tester, Jw; Anderson, Bj; Batchelor, As; Blackwell, Dd; Dipippo, R; Drake, Em; Garnish, J; Livesay, B; Moore, Mc; Nichols, K; Petty, S; Toksoz, Mn; Veatch, Rw; Baria, R; Augustine, C; Murphy, E; Negraru, P; Richards, M (2007), "Geothermal Energy Systems", Philosophical transactions. Series A, Mathematical, physical, and engineering sciences, 365 (1853), ResLab, Australia: 1057–94, doi:10.1098/rsta.2006.1964, PMID 17272236, retrieved 2007-12-11 {{citation}}: Unknown parameter |month= ignored (help)CS1 maint: multiple names: authors list (link) (from internet archive)
  26. ^ National Economic and Development Authority (NEDA), Republic of the Philippines. "National Income Accounts (NIA) – GNP/GDP Matrices". Retrieved September 2010. {{cite web}}: Check date values in: |accessdate= (help)
  27. ^ Agcaoili, Lawrence. (November 26, 2010). GDP growth slows to 6.5% in 3rd quarter. The Philippine Star.

Further reading

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