Economy of the Philippines

The economy of the Philippines is the world’s 34th largest economy by nominal GDP according to the 2017 estimate of the International Monetary Fund’s statistics, it is the 13th largest economy in Asia, and the 3rd largest economy in the ASEAN after Indonesia and Thailand. The Philippines is one of the emerging markets and is the sixth richest in Southeast Asia by GDP per capita values, after the regional countries of Singapore, Brunei, Malaysia, Thailand and Indonesia.

The Philippines is primarily considered a newly industrialized country, which has an economy transitioning from one based on agriculture to one based more on services and manufacturing. As of 2017, GDP by Purchasing power parity was estimated to be at $986.980 billion.

Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include Japan, China, the United States, Singapore, South Korea, the Netherlands, Hong Kong, Germany, Taiwan, and Thailand. The Philippines has been named as one of the Tiger Cub Economies together with Indonesia, and Thailand. It is currently one of Asia’s fastest growing economies. However, major problems remain, mainly having to do with alleviating the wide income and growth disparities between the country’s different regions and socioeconomic classes, reducing corruption, and investing in the infrastructure necessary to ensure future growth.

The Philippine economy is projected to be the 5th largest in Asia and 16th biggest in the world by 2050. According to the PricewaterhouseCoopers, it estimates that it will be the 12th to 14th richest economy in the world by 2060. While this opposes other reports from HSBC Holdings PLC, that by the year 2050, the Philippines will have been stated to surpass the economy of Indonesia due to its yearly higher GDP growth rate of 6.5% (Second, after China). However, the economic statistics may still vary depending on the performance of the government every year.

Macroeconomic trends
The Philippine economy has been growing steadily over decades and the International Monetary Fund in 2014 reported it as the 39th largest economy in the world. However its growth has been behind that of many of its Asian neighbors, the so-called Asian Tigers, and it is not a part of the Group of 20 nations. Instead it is grouped in a second tier for emerging markets or newly industrialized countries. Depending on the analyst, this second tier can go by the name the Next Eleven or the Tiger Cub Economies.

In the years 2012 and 2013, the Philippines posted high GDP growth rates, reaching 6.8% in 2012 and 7.2% in 2013, the highest GDP growth rates in Asia for the first two quarters of 2013, followed by China and Indonesia.

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

Composition by sector
As a newly industrialized country, the Philippines is still an economy with a large agricultural sector; however, services have come to dominate the economy. Much of the industrial sector is based on processing and assembly operations in the manufacturing of electronics and other high-tech components, usually from foreign multinational corporations.

Filipinos who go abroad to work–-known as Overseas Filipino Workers or OFWs—are a significant contributor to the economy but are not reflected in the below sectoral discussion of the domestic economy. OFW remittances is also credited for the Philippines’ recent economic growth resulting to investment status upgrades from credit ratings agencies such as the Fitch Group and Standard & Poor’s. In 1994, more than $2 billion USD worth of remittance from Overseas Filipinos were sent to the Philippines. In 2012, Filipino Americans sent 43% of all remittances sent to the Philippines, totaling to $10.6 billion USD.

Agriculture
Agriculture employs 30% of the Filipino workforce as of 2014. Agriculture accounts for 11% of Philippines GDP as of 2014. The type of activity ranges from small subsistence farming and fishing to large commercial ventures with significant export focus.

The Philippines is the world’s largest producer of coconuts producing 19,500,000 tons in 2009. Coconut production in the Philippines is generally concentrated in medium-sized farms. The Philippines is also the world’s largest producer of pineapples, producing 2,458,420 million metric tons in 2013.

Rice production in the Philippines is important to the food supply in the country and economy. The Philippines is the 8th largest rice producer in the world, accounting for 2.8% of global rice production. The Philippines was also the world’s largest rice importer in 2010. Rice is the most important food crop, a staple food in most of the country. It is produced extensively in Luzon (especially Central Luzon), Western Visayas, Southern Mindanao and Central Mindanao.

The Philippines is one of the largest producers of sugar in the world. At least 17 provinces located in eight regions of the nation have grown sugarcane crops, of which the Negros Island Region accounts for half of the country’s total production. As of Crop Year 2012-2013, 29 mills are operational divided as follows: 13 mills in Negros, 6 mills in Luzon, 4 mills in Panay, 3 mills in Eastern Visayas and 3 mills in Mindanao. A range from 360,000 to 390,000 hectares are devoted to sugarcane production. The largest sugarcane areas are found in the Negros Island Region, which accounts for 51% of sugarcane areas planted. This is followed by Mindanao which accounts for 20%; Luzon by 17%; Panay by 07% and Eastern Visayas by 04%.

Shipbuilding and repair
The Philippines is a major player in the global shipbuilding industry with shipyards in Subic, Cebu, General Santos City and Batangas. It became the fourth largest shipbuilding nation in 2010. Subic-made cargo vessels are now exported to countries where shipping operators are based. South Korea’s Hanjin started production in Subic in 2007 of the 20 ships ordered by German and Greek shipping operators. The country’s shipyards are now building ships like bulk carriers, container ships and big passenger ferries. General Santos’ shipyard is mainly for ship repair and maintenance.

Being surrounded by waters, the country has abundant natural deep-sea ports ideal for development as production, construction and repair sites. On top of the current operating shipyards, two additional shipyards in Misamis Oriental and Cagayan province are being expanded to support future locators. It has a vast manpower pool of 60,000 certified welders that comprise the bulk of workers in shipbuilding.

In the ship repair sector, the Navotas complex in Metro Manila is expected to accommodate 96 vessels for repair.

Automotive
The ABS used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. Toyota, Mitsubishi, Nissan and Honda are the most prominent automakers manufacturing cars in the country. Kia and Suzuki produce small cars in the country. Isuzu also produces SUVs in the country. Honda and Suzuki produce motorcycles in the country. A 2003 Canadian market research report predicted that further investments in this sector were expected to grow in the following years. Toyota sells the most vehicles in the country. By 2011, China’s Chery Automobile company is going to build their assembly plant in Laguna, that will serve and export cars to other countries in the region if monthly sales would reach 1,000 units. Automotive sales in the Philippines moved up from 165,056 units in 2011 to over 180,000 in 2012. Japan’s automotive manufacturing giant Mitsubishi Motors has announced that it will be expanding its operations in the Philippines.

Aerospace
Aerospace products in the Philippines are mainly for the export market and include manufacturing parts for aircraft built by both Boeing and Airbus. Moog is the biggest aerospace manufacturer with base in Baguio in the Cordillera region. The company produces aircraft actuators in their manufacturing facility.

In 2011, the total export output of aerospace products in the Philippines reached US $3 billion.

Electronics
A Texas Instruments plant in Baguio has been operating for 20 years and is the largest producer of DSP chips in the world. 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. 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. Electronics and other light industries are concentrated in Laguna, Cavite, Batangas and other CALABARZON provinces with sizable numbers found in Southern Philippines that account for most of the country’s export.

Mining and extraction
The country is rich in 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, 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 sulphur. 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 industry rebounded starting in late 2004 when the Supreme Court upheld the constitutionality of an important law permitting foreign ownership of Philippines mining companies. 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.

Offshoring & outsourcing
In 2008, the Philippines has surpassed India as the world leader in business process outsourcing. The majority of the top ten BPO firms of the United States operate in the Philippines. The industry generated 100,000 jobs, and total revenues were placed at $960 million for 2005. In 2012, BPO sector employment ballooned to over 700,000 people and is contributing to a growing middle class. BPO facilities are located mainly in Metro Manila and Cebu City although other regional areas such as Baguio, Bacolod, Cagayan de Oro, Clark Freeport Zone, Dagupan, Davao City, Dumaguete, Lipa, Iloilo City, and Naga City, Camarines Sur are now being promoted and developed for BPO operations.

Call centers began in the Philippines as plain providers of email response and managing services and is now a major source of employment. Call center services include customer relations, ranging from travel services, technical support, education, customer care, financial services, online business to customer support, and online business-to-business support. Business process outsourcing (BPO) is regarded as one of the fastest growing industries in the world. The Philippines is also considered as a location of choice due to its many outsourcing benefits such as less expensive operational and labor costs, the high proficiency in spoken English of a significant number of its people, and a highly educated labor pool. In 2011, the business process outsourcing industry in the Philippines generated 700 thousand jobs and some US$11 billion in revenue, 24 percent higher than 2010. By 2016, the industry is projected to reach US$27.4 billion in revenue with employment generation to almost double at 1.3 million workers.

BPOs and the call center industry in general are also credited for the Philippines’ recent economic growth resulting in investment status upgrades from credit ratings agencies such as Fitch and S&P.

With the Philippines being the 33rd largest economy in the world, the country continues to be a promising prospect for the BPO Industry. Just in August 2014, the Philippines hit an all-time high for employment in the BPO industry. From 101,000 workers in 2004, the labor force in the industry has grown to over 930,000 in just the first quarter of 2014.

Growth in the BPO industry continues to show significant improvements with an average annual expansion rate of 20%. Figures have shown that from $1.3 Billion in 2004, export revenues from the BPO sector has increased to over $13.1 Billion in 2013. The IT and Business Process Association of the Philippines (IBPAP) also projects that the sector will have an expected total revenue of $25 Billion in 2016.

This growth in the industry is further promoted by the Philippine government. The industry is highlighted by the Philippines Development Plan as among the 10 high potential and priority development areas. To further entice investors, government programs include different incentives such as tax holidays, tax exemptions, and simplified export and import procedures. Additionally, training is also available for BPO applicants.

Tourism
Tourism is an important sector for the Philippine economy, contributing 7.8% to the Philippine gross domestic product (GDP) in 2014.

The tourism industry employed 3.8 million Filipinos, or 10.2 per cent of national employment in 2011, according to data gathered by the National Statistical Coordination Board. In a greater thrust by the Aquino administration to pump billion[clarification needed] to employ 7.4 million people by 2016, or about 18.8 per cent of the total workforce, contributing 8 per cent to 9 per cent to the nation’s GDP.

In 2014, the tourism sector contributed 1.4 trillion pesos to the country’s economy.

Statistics
Most of the following statistics are sourced from the International Monetary Fund – Philippines (as of 2012; figures are in US dollars unless otherwise indicated).

GDP – purchasing power parity: $751.770 billion (2015)
GDP – real growth rate: 5.6% (Q2 2015)
GDP per capita purchasing power parity: $6,985.680 (2014)
GDP nominal: $330.259 billion (2015)
GDP per capita: $2,913.344 (2014)
GDP – composition by sector:
agriculture: 10.3%
industry: 30.9%
services: 58.8% (2015 est.)
Population below poverty line: less than $1.25 / 10.41% (2009)
less than $2 / 25.2% (2012), 26.3% (2009), 32.9% (2006 est.)
Household income or consumption by percentage share:
lowest 10%: 2.9%
highest 10%: 30.5% (2012 est.)
Inflation rate (consumer prices): 1.4% (2015 est.), 4.1% (2014 est.), 5.3% (2011 est.), 3.5% (September 2010)
Labor force: 41.37 million (2015 est.)
Labor force by occupation:
agriculture 29%
industry 16%
services 55% (2015 est.)
Unemployment rate: 6.3% (2015 est.), 6.8% (2014 est.) 7.5% (April 2013), 6.9% (April 2012), 7.2% (April 2011)
Budget:
revenues: $34.58 billion (2013), $46.64 billion (2015 est.)
expenditures: $44.29 billion (2013), $47.76 billion (2015 est.)
Foreign Reserves: US$85.761 billion (January 2013)
Industries: electronics assembly, shipbuilding, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing
Industrial production growth rate: 6% (2015 est.)
Electricity – production: 75.27 billion kWh (2013 est.)
Electricity – consumption: 75.27 billion kWh (2013 est.)
Electricity – exports: 0 kWh (2013)
Electricity – imports: 0 kWh (2013)
Agriculture – products: sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, mangoes; pork, eggs, beef; fish
Exports: $58.65 billion (Jan-Sept 2015 est.) $62.1 billion (2014) $53.98 billion (2013) $54.17 billion (2011 est.); $69.46 billion (2010 est.)
Exports – commodities: semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits
Exports – partners: Japan 21%, United States 15%, China 11%, Hong Kong 10.6%, Singapore 6.2%, Germany 4.5%, South Korea 4.3% (2015)
Imports: $66.69 billion (2015), $65.4 billion (2014), $61.831 billion (2013), $68.84 billion (2011 est.)
Imports – commodities: electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic
Imports – partners: China 16.2%, United States 10.8%, Japan 9.6%, Singapore 7%, South Korea 6.5%, Thailand 6.4%, Malaysia 4.7, Indonesia 4.4% (2015)
Debt – external: $75.61 billion (30 September 2015 est.)
Currency: 1 Philippine peso (₱) = 100 centavos
Exchange rates: Philippine pesos (PHP) per US dollar – 45.50 (2015) 44.39 (2014 average), 42.43 (2012 average), 43.44 (2011), 45.11 (2010), 47.68 (2009), 44.439 (2008), 46.148 (2007), 51.246 (2006), 55.086 (2005)

Regional Accounts

According to PSA, Gross Regional Domestic Product (GRDP) is GDP measured at regional levels. Figures below are for the year 2016:

Note: Green-colored cells indicate higher value or best performance in index, while yellow-colored cells indicate the opposite. Numbers may not add up to totals due to rounding.

Source from Wikipedia