Economy of the Philippines

Economy of Philippines
Skyline of Metro Manila
Currency	Philippine peso (PHP) = 100 centavos (English) piso = 100 sentimo (Filipino)
Fiscal year	Calendar year
Trade organisations	APEC, ASEAN, WTO, EAS, Asian Development Bank, ASEAN Plus Three, and others
Statistics
GDP	$257 billion nominal(2012)[1] $424.355 billion PPP (2012)[2]
GDP growth	6.6% (2012)[3]
GDP per capita	$2,614 (2012)[4] (nominal 126th) $4,430 (2012)[4] (PPP 126th)
GDP by sector	agriculture (12.3%), industry (33.3%), services (54.4%) (2011 est.)[5]
Inflation (CPI)	2.6% (April 2013)[6]
Population below poverty line	national – 22.9% (2006 est.)[5] international – 22.6% (2006)[7] regional – 27% (2006)[8]
Gini coefficient	43.0 (2009)[9]
Labour force	59.81 million (2011 est.)[5]
Labour force by occupation	services (52%) agriculture (33%), industry (15%) (2010 est.)[5]
Unemployment	6.8% (October 2012)[10]
Main industries	electronics assembly, Business Process Outsourcing, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing[5]
Ease of Doing Business Rank	136th of 183 countries ranked[11]
External
Exports	$52 billion (2012)[12]
Export goods	semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits[5]
Main export partners	Japan 18.5%, United States 14.8%, China 12.7%, Singapore 8.9%, Hong Kong 7.7%, South Korea 4.6%, Taiwan 4.2%, Thailand 4.0%, Netherlands 3.6%, Germany 3.5% (2011)[13]
Imports	$57.24 billion (2010)
Import goods	electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic[5]
Main import partners	Japan 10.8%, United States 10.8%, China 10.1%, Singapore 8.1%, South Korea 7.3%, Taiwan 6.9%, Thailand 5.8%, Saudi Arabia 5.4%, Malaysia 4.4%, Indonesia 3.9% (2011)[14]
Gross external debt	$62.431 billion (September 2011)[15]
Public finances
Public debt	40.5 % of GDP (2012)[16]
Revenues	$31.38 billion (2011)
Expenses	$35.95 billion (2011)[17]
Economic aid	$1.67 billion[18]
Credit rating	Standard & Poor's:[19] BBB- (Domestic) BBB- (Foreign) BBB- (T&C Assessment) Outlook: Positive[20] Moody's:[21] Ba1 Outlook: Positive[22] Fitch:[23] BBB- Outlook: Stable
Foreign reserves	$85.761 billion (January 2013)[24]
All values, unless otherwise stated, are in US dollars

The Economy of the Philippines is the 40^th largest in the world, according to 2012 International Monetary Fund statistics and it is also one of the emerging markets in the world.^[25] The Philippines is considered as a newly industrialized country, it has been transitioning from one based on agriculture to one based more on services and manufacturing. According to the CIA Factbook, the estimated 2012 GDP (purchasing power parity) was 424.355 billion.^[5] Goldman Sachs estimates that by the year 2050, the Philippines will be the 14^th largest economy in the world, Goldman Sachs also included the Philippines in its list of the Next Eleven economies. HSBC projects the Philippine economy to become the 16th largest economy in the world, 5th largest economy in Asia and the largest economy in the South East Asian region by 2050.^[26]

Primary exports include semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, and fruits. Major trading partners include the United States, Japan, China, 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, Malaysia and Thailand.

Macroeconomic trends [edit]

The Philippine economy has been growing steadily over decades and the International Monetary Fund in 2011 reported it as the 45th largest economy in the world. However its growth has been behind that of many of its Asian neighbors, the so-called Asian Tigers, nor is it a part of the Group of 20 nations. Instead it is often grouped in a second tier of emerging markets or of newly industrialized countries. Depending upon the analyst, this second tier can go by the name the Next Eleven or the Tiger Cub Economies.

A chart of selected statistics showing trends in the gross domestic product of the Philippines using data taken from the International Monetary Fund.^[27][28]

GDP growth at constant 1985 prices in Philippine pesos:^[27][29][30]

Composition by sector [edit]

As a newly industrialized country, the Philippines is still an economy with a large agricultural sector; however, services have come to dominate the economy.^{[citation needed]} 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 aboard 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.

Agriculture [edit]

Pineapples on a fruit stand in Cagayan de Oro.

Raw Sugar Production in the Philippines

The agriculture sector makes up 12% of the GDP and employs 33% of the workforce. The type of activity ranges from small subsistence farming and fishing to large commercial ventures with significant export focus, such as major multinational corporations like Dole Food Company and Del Monte Foods.

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.^[31] By 1995, the production of coconut in the Philippines had experienced a 6.5% annual growth and later surpassed Indonesia in total output in the world.^[32] The Philippines is also the world's largest producer of pineapples, with 2,198 thousand metric tons.^[33] Rice Production in the Philippines is important to the food supply in the country and economy. The country is the 8th largest rice producer in the world, accounting for 2.8% of global rice production.^[34] However, the country is also the world's largest rice importer in 2010.^[35] Rice is the most important food crop, a staple food in most of the country. It is produced extensively in Luzon, the Western Visayas, Southern Mindanao, and Central Mindanao. The Philippines is also one of the largest producer of sugar in the world according to Food and Agriculture Organization of the United Nations Statistics Division ^[36]. At least 17 provinces located in 8 regions of the Philippine archipelago have grown sugarcane crops, of which Negros island accounts for half of the country’s total production. As of Crop Year 2012-2013, 29 mills are operational divided as follows: 6 mills in Luzon, 13 mills in Negros, 4 mills in Panay, 3 mills in Eastern Visayas and 3 mills in Mindanao ^[37]. A range from 360,000 to 390,000 hectares are devoted to sugarcane production. The largest sugarcane areas are found in Negros which accounts for 51% of sugarcane areas planted. This is followed by Mindanao which accounts for 20%; Luzon, 17%; Panay islands, 7% and Eastern Visayas, 4% ^[38].

Shipbuilding and repair [edit]

The Philippines is a major player in the global shipbuilding industry with shipyards in Subic, Cebu, General Santos City and Batangas.^[39][40] It became the fourth largest shipbuilding nation in 2010.^[41][42] 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.^[43] 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.^[44]

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.^[45]

Automotive [edit]

The ABS used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. Ford,^[46] Toyota,^[47] Mitsubishi, Nissan and Honda are the most prominent automakers manufacturing cars in the country.^{[citation needed]} 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.^[48] 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.^[49] 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.^[50]

Aerospace [edit]

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.^[51]

Electronics [edit]

. A Texas Instruments plant in Baguio has been operating for 20 years and is the largest producer of DSP chips in the world.^[52] 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.^[53] 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.

Mining and extraction [edit]

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,^[54] 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.^{[citation needed]} 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.^{[citation needed]}

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]}

Offshoring and outsourcing [edit]

Cebu IT Park in Cebu

A business process outsourcing office in Bacolod

According to an IBM Global Location Trends Annual Report, as of December 2010^[update] the Philippines has surpassed India as the world leader in business process outsourcing.^[55][56] The majority of the top ten BPO firms of the United States operate in the Philippines.^{[citation needed]} Total jobs in the industry grew to 100,000 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, Legazpi, Dumaguete, Lipa, Iloilo City, and CamSur 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 location of choice due to its less expensive operational and labor costs and high proficiency in spoken English and highly educated labor pool. In 2011, the business process outsourcing industry in the Philippines generated 700 thousand jobs^[57] and some US$11 billion in revenue,^[58] 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.^[59]

Regional Accounts [edit]

Gross Regional Domestic Product (GRDP) is GDP measured at regional levels.

Note: Green-colored cells indicate higher value or best performance in index, while yellow-colored cells indicate the opposite.

Economic indicators and international rankings [edit]

Organization	Title	As of	Change from previous	Ranking
International Monetary Fund	Gross Domestic Product (PPP)	2012	( 1)	31st[60]
International Monetary Fund	Gross Domestic Product (nominal)	2012	( 3)	40th[61]
International Monetary Fund	GDP per Capita (PPP)	2011	()	126th[62]
International Monetary Fund	GDP per Capita (nominal)	2011	( 1)	124th[63]
International Monetary Fund	Foreign Reserves	2012		25th[64]
United Nations	Population	2012	()	12th[65]
United Nations	Area	2012	()	73rd[66]
United Nations	Population Density	2010		45th[67]
Central Intelligence Agency	Life Expectancy	2011		133rd out of 221st[68]
United Nations	Literacy Rate	2011		84th out of 182nd[69]
The World Factbook	External Debt	2010		46th[70]
World Tourism Organization	Tourist Arrival	2010	( 1)	52 out of 198[71]
United Nations	Human Development Index	2011	( 1)	112 out of 187[72]
World Economic Forum	Global Competitiveness	2012	( 10)	65 out of 144[73]
Fraser Institute	Economic Freedom of the World	2012	( 16)	61 out of 144[74]
World Economic Forum	Global Gender Gap Report	2011	( 1)	8 out of 135[75]
World Economic Forum	Travel and Tourism Competitiveness	2011		94 out of 139[76]
World Economic Forum	Global Enabling Trade Report	2012	( 20)	72 out of 132[77]
World Bank	Ease of Doing Business	2012	( 12)	136 out of 183[78]
Transparency International	Corruption Perceptions Index	2012	( 24)	105 out of 176[79]
Heritage Foundation/The Wall Street Journal	Index of Economic Freedom	2013	( 10)	97 out of 177[80]
The Economist Intelligence Unit	Global Peace Index	2012	( 3)	133 out of 158[81]
Reporters Without Borders	Press Freedom Index	2011	( 16)	140 out of 178[82]
World Economic Forum	Financial Development Index	2011		44 out of 60[83]

Statistics [edit]

Percentage of population in 2007 living below poverty line, by province. Provinces with darker shades have more people living below the poverty line.

Filipino exports in 2006

Graphical depiction of Philippines' product exports in 28 color-coded categories.

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: $416.721 billion (2012est.)
• GDP - real growth rate: 6.6% (2012)
• GDP per capita purchasing power parity: $4,263.689 (2012 est. in 2012 US dollars)
• GDP nominal: $240.664 Billion (2012)^[87]
• GDP per capita: $2,462.354 (2012 est.)^[88]
• GDP - composition by sector:

  agriculture: 12.3%

  industry: 33.3%

  services: 54.4% (2011 est.)^[5]

• Population below poverty line:^[5] 32.9% (2006 est.)^[5]
• Household income or consumption by percentage share:

  lowest 10%: 2.4%

  highest 10%: 31.2% (2006)^[5]

• Inflation rate (consumer prices): 5.3% (2011 est.),^[5] 3.5% (September 2010)^[89]
• Labor force: 39.81 million (2011 est.)^[5]
• Labor force by occupation:

  agriculture 33%

  industry 15%

  services 52% (2011 est.)^[5]

• Unemployment rate: 7.2% (April 2011)^[10]
• Budget:

  revenues: $31.99 billion (2011 est.)^[5]

  expenditures: $36.71 billion (2011 est.)^[5]

• Foreign Reserves: US$81.90 billion (September 2012)^[90]
• Industries: electronics assembly, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing
• Industrial production growth rate: 12.1% (2010 est.)^[5]
• Electricity - production: 59.19 billion kWh (2009 est.)^[5]
• Electricity - consumption: 54.4 billion kWh (2009 est.)^[5]
• Electricity - exports: 0 kWh (2007)^[5]
• Electricity - imports: 0 kWh (2007)^[5]
• Agriculture - products: sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, mangoes; pork, eggs, beef; fish^[5]
• Exports: $54.17 billion (2011 est.); $69.46 billion (2010 est.)^[5][91]
• Exports - commodities: semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits^[5]
• Exports - partners: China 19%, United States 13.4%, Singapore 13.2%, Japan 12.8%, Hong Kong 7.6%, Germany 4.2%, South Korea 4.1% (2010)^[5]
• Imports: $68.84 billion (2011 est.)^[5]
• Imports - commodities: electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic^[5]
• Imports - partners: Japan 14.1%, China 13.6%, United States 9.9%, Singapore 9.3%, Thailand 6.5%, South Korea 5.6%, Indonesia 4.1% (2010)^[5]
• Debt - external: $62.41 billion (31 December 2011 est.)^[5]
• Currency: 1 Philippine peso (₱) = 100 centavos
• Exchange rates: Philippine pesos (PHP) per US dollar - 43.44 (2011), 45.11 (2010), 47.68 (2009), 44.439 (2008), 46.148 (2007), 51.246 (2006),^[5] 55.086 (2005^{[citation needed]})

Government budget [edit]

The national government budget for 2012 has set the following budget allocations:^[92]

See also [edit]

	Economy portal
	Philippines portal

• List of companies of the Philippines
• Next Eleven
• Tiger Cub Economies
• Newly Industrialized countries
• Economy of Asia
• Emerging markets

References [edit]

Further reading [edit]

• Balisacan, Arsenio; Hal Hill (2003). The Philippine Economy: Development, Policies, and Challenges. New York: Oxford University Press. p. 496. ISBN 978-0-19-515898-4 
• Balisacan, Arsenio; Hal Hill (2007). The Dynamics of Regional Development: The Philippines in East Asia. Cheltenham, UK: Edward Elgar 
• Bhagwati, Jagdish and Anne Krueger. (1974). Foreign Trade Regimes and Economic Development. National Bureau of Economic Research.
• Kang, David C. (2002). Crony Capitalism – Corruption and Development in South Korea and the Philippines. Cambridge University Press. ISBN 978-0-521-00408-4.
• Villegas, Bernardo. (2010). The Philippine Advantage (3rd ed.). Manila: University of Asia and the Pacific.
• State of the Philippine Islands A book written by a Spaniard during the early 19th century that studies the economic conditions of the Philippines which was then, a colony of Spain. An online book published by Filipiniana.net.

External links [edit]

Wikimedia Commons has media related to: Economy of the Philippines

• Bangko Sentral ng Pilipinas (Central Bank of the Philippines)
• National Statistical Coordination Board
• Department of Trade and Industry
• Department of Finance
• Philippine Stock Exchange
• National Federation of Sugarcane Planters
• Department of Tourism
• Philippines Business Brokers
• Philippine Economic Zone Authority
• Philippines 8th Regular Foreign Investment Negative List

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