Overview on Philippine Economy

The Philippines is the 39th largest economy in the world, according to 2014 data
from the International Monetary Fund (IMF). It has also been considered to be an
emerging market with the fastest growth rate within South East Asia.
But amidst these developments, the problem that still thrives is the lack of
inclusive growth and development for majority of its population.
(Total population = 100.1 million; GDP = US$284.6 billion as of 2014)

What drives the economy?

Coming from an agriculture-based (11.2%) economy, the Philippines is now
transitioning to one more focused on the Services (57.2%) and Industry (31.6%)
sectors.
*percentages indicate contribution to GDP

Industry Sector comprises of assembly operations of food, beverages, clothing

and textile, fertilizers, electronics, automobile parts, among many others. These
are largely concentrated in urban areas, particularly in Metro Manila. It
continues to have weak linkages to rural communities due to inadequate
infrastructures and unreliable transportation and communication.
Services Sector is the highest contributing sector to the countrys overall GDP.
Due to less expensive operational and labor costs, high proficiency in English,
and a highly educated labor pool, Business Process Outsourcing (BPO) in the
country has grown to be the second highest (next to India). These BPO services
include call centers.
Agricultural Sector, although the potential of this sector is relatively big
(considering the country consists of more than 40 percent amiable farmland),
inadequate infrastructure, lack of financing, insufficient government support, as
well as lack of training for sustainable enterprise hinders its growth. The fishing
industry also suffers almost similar issues.
No Inclusive Growth
The total contribution of Metro Manila to GDP amounts to 37.02 percent where
the next highest contributor amounts to 15.94 percent from CALABARZON.
Fifty-six percent of Filipinos live in rural areas as of 2014, according to
worldbank.org. As the Philippines is a BPO-run economy which is centered on
urban areas, the lack of impact in terms of growth and development is evident
among the poor people within the 56 percent.

Monopoly of Wealth
As mentioned in one report (The Grim Reality Behind the Philippines Economic
Growth, 2013) from The Atlantic, the economic boom appears to have only
benefited a tiny minority of elite families; meanwhile, a huge segment of citizens
remain vulnerable to poverty, malnutrition, and other grim developmental
indicators that belie the countrys apparent growth.
It further adds that there is an income inequality in the Philippines which stands
out amidst the growth.
In 2011, the collective wealth of 40 richest Filipino families made up 76.5 percent
of the countrys overall increase in GDP, according to data from Forbes Asia
interpreted by economist Cielito Habito. This further emphasizes the extreme lack
of wealth distribution (and therefore development) amongst the country where
24.9 percent fall beyond the poverty line (as per data from the Philippine Star in
July 2014), about 80 percent of which live in rural areas. Fishermen, farmers, and
indigenous people make up the poorest of the poor.
Brief History
o
o
o

The Philippines had a fair share of growth and recessions after the Second World
War.
From being one of the richest countries in Asia (next to Japan) to being the
poorest
1984-85 severe recession and shrunk the economy more than 10%. Another
factor to this was the instability of the government at that time (Pres. Aquino after
Marcos Term)
Pres. Ramos introduced a range of economic reforms and initiatives design to
spur business growth and foreign investment. Because of this, the country saw a
period of higher growth
1997 Asian financial crisis slowed down the economy growth again. This resulted
to one of the highest unemployment figures in Asia (21% of total population of
the Philippines out of work).
Pres. Estrada continued some of the reforms of the previous administration
(General Banking Act; Securities Regulation Code; liberalize foreign participation
in retail trade sector, promote/regulate electronic commerce)

Sources:
www.indexmundi.com/philippines/gdp-composition-by-sector.html
www.adb.org/countries/philippines/economy
www.historycentral.com/nationbynation/Philippines/Economy.html
http://www.theatlantic.com/international/archive/2013/05/the-grim-reality-behind-thephilippines-economic-growth/275597/
http://www.ruralpovertyportal.org/country/home/tags/philippines
http://www.philstar.com/business/2014/07/05/1342488/poverty-incidence-eases-24.9