Introduction
The classification of the Philippines as a rich or poor country hinges on various criteria. According to the World Bank, it falls into the lower-middle-income category, reflecting progress in economic growth but persistent challenges like poverty and inequality. Its nominal GDP of $435.67 billion (2023 est.) ranks 34th globally, and when adjusted for purchasing power parity (PPP), the GDP rises to $1.27 trillion, indicating a higher standard of living. However, factors like income inequality, as reflected in a high Gini coefficient, contribute to the perception of poverty despite economic growth. The Human Development Index ranking of 117th underscores the need for improvement in health, education, and living standards. The Philippines exhibits a complex economic profile, showcasing traits of both developing and developed nations, emphasizing the ongoing struggle to balance growth with addressing social disparities and fostering human development.
Country Profile
The Philippines, an archipelago comprising more than 7,000 islands, is characterized by a predominantly concentrated population on just 11 of its landmasses. Featuring mountainous terrain and facing geological challenges with around 20 active volcanoes, the country is frequently subjected to typhoons and storms. Historically a Spanish colony for more than three centuries, it transitioned to American rule in the early 20th century following a protracted rebellion against Spanish governance. The enduring influences of Spanish and US legacies are evident in language, religion, and government. Achieving self-rule in 1935 and full independence in 1946 under a US-style constitution, the Philippines maintained a close alliance with the United States, receiving military aid to address internal challenges, particularly Islamist and communist insurgencies. In the May 2022 election, Ferdinand Marcos Jr., son of the authoritarian President Ferdinand Marcos, secured a sweeping victory, succeeding Rodrigo Duterte. Widely known as “Bongbong,” President Marcos unified two populist right-wing dynasties by enlisting Sara Duterte, the outgoing president’s daughter, as his vice-president. This political transition marked a significant shift from the Duterte era, promising a new chapter in Philippine leadership.
Economy of the Philippines
According to World Bank Economic update data during the initial quarter of 2023, strong domestic demand drove a growth rate of 6.4%, compensating for the decline in global demand. Following its peak in early 2023, inflation decreased to 6.1 percent in May due to the tightening of monetary policy by the BSP. Nevertheless, it remains considerably higher compared to other ASEAN countries. The national government debt has reached a stable level of around 61 percent of GDP, and the fiscal deficit is gradually decreasing to 7.3 percent of GDP in 2022. As a result, the strategy to achieve fiscal consolidation over the medium term is mostly progressing as intended. In the future, strong domestic demand will drive the economy to grow at a rate of 6.0 percent in 2023 and then gradually realize its long-term potential. The economic recovery will contribute to poverty reduction, notwithstanding the existing inclination of the labor market towards low-productivity roles.
Newly Industrialized nation
The Philippines’ economy is classified as an emerging market, making it one of the most vibrant economies in the Asia-Pacific region. The country is striving to attain enhanced industrialization and economic expansion as it progresses as an economy in development. The Philippine economy in 2023, ranked as the 34th largest economy in the world based on nominal GDP and the 14th largest in Asia.
The economy is undergoing a shift from an agrarian-based structure to a more service- and manufacturing-oriented one. The economic recovery is progressing smoothly, with growth accelerating to 7.6 percent in 2022 from 5.7 percent in 2021. In the foreseeable future, the expansion prospects will be sustained by resilient domestic demand, propelled by a vigorous job market, ongoing public investments, and the favorable consequences of recent reforms in investment policies that have the potential to enhance private investment.
Population dynamics of the Philippines
The population of the Philippines currently stands at over 110 million individuals. The yearly population growth rate has experienced a substantial decline from 3.3% in 1960 to approximately 1.3% at present. The fertility rate in the Philippines has experienced a substantial decline throughout the years. The fertility rate in 1969 was 6.4 children per woman. Currently, the fertility rate stands at 2.1 offspring per woman. One contributing factor is the growing utilization of contraceptives and contemporary techniques of family planning. Given an annual population growth rate of approximately 2 million individuals, it is projected that the population will undergo a twofold increase within approximately 40 years.
The present growth rate is expected to decrease by 50% by 2050. According to predictions, the population is expected to reach 125 million by 2030. The Philippines currently ranks as the 13th most populous nation globally.
GDP Growth rate, GDP per capita of PH, GDP by sector, and ranking
The Philippine Gross Domestic Product (GDP) experienced a growth rate of 7.6 percent in 2022, compared to 5.7 percent in 2021. This marks the most significant rate of increase documented since 2017, exceeding the target range of 6.5 percent to 7.5 percent set at the end of the plan.
In October 2023, the country’s employment rate was predicted to be 95.8 percent, which is the highest reported rate since April 2005. This rate is also the same as the estimated rate in November 2022. The number of individuals aged 15 and above who were employed reached 47.80 million in October 2023, surpassing the figures of 47.06 million in October 2022 and 44.63 million in July 2023.
The country’s unemployment rate in October 2023 stood at 4.2 percent, a decrease from the 4.5 percent rate in October of the previous year and the 4.8 percent rate reported in July 2023. The recorded unemployment rate in October 2023 reached its lowest point since April 2005.
Approximately 2.09 million individuals were without employment in October 2023, considering their significant number. This figure was below the officially reported number of unemployed individuals in October 2022, which stood at 2.24 million, and in July 2023, which stood at 2.27 million.
In October 2023, the labor force participation rate (LFPR) stood at 63.9 percent, indicating that there were 49.89 million Filipinos who were either employed or jobless. The labor force participation rate (LFPR) was lower than the reported rate in October 2022, which stood at 64.1 percent, but higher than the LFPR in July 2023, which was recorded at 60.1 percent.
An estimate suggests that the mean number of hours worked per week by an employed person in October 2023 was 41.2 hours. The weekly hours in November 2022 were above the 40.2 hours recorded in October 2022 but fell short of the 42.3 hours observed in July 2023.
In October 2023, there were 5.60 million employed Filipinos out of the total 47.80 million who were either underemployed or stated the wish to have more working hours in their current job, to have an additional job, or to have a new job with longer working hours.
In October 2023, the services sector remained the largest employer in terms of the number of employed individuals, accounting for 60.1 percent of the total employed population of 47.80 million. The agriculture and industry sectors constituted 22.2 percent and 17.8 percent, respectively, of the employed workforce.
Population below the poverty line
In 2021, the poverty rate among the population was predicted to be 18.1 percent, which translates to around 19.99 million Filipinos living below the poverty line. This is 0.6 percentage points below the limit of the anticipated aim, which is set between 15.5 percent and 17.5 percent. Poverty incidence among the population refers to the percentage of Filipinos whose individual income is inadequate to cover their essential food and non-food requirements. According to the Family Income and Expenditure Survey conducted by the PSA, the country has a total of 19.99 million people who are living below the poverty threshold. This accounts for 18.1 percent of the total population. The number of impoverished Filipinos in 2018 amounted to 17.67 million. Simultaneously, the population of those experiencing food scarcity rose by 1.01 million. The PSA also disclosed a 7.8 percent unemployment rate, corresponding to a total of 3.71 million unemployed individuals in the Philippines.
Income inequality in the PH
In the 2022 study conducted by the World Bank (WB), it was determined that the Philippines is positioned in the 15th spot out of 63 nations in terms of income inequality. “Income and consumption disparities in the Philippines remain more pronounced compared to neighboring countries.” The World Bank research states that the Philippines is ranked 15th out of 63 nations in terms of income inequality, with an income Gini coefficient of 42.3% in 2018. The analysis reveals that a mere 1% of earners in the Philippines possess 17% of the total national income, whereas the bottom 50% of earners jointly receive 14%.
Average gross salaries and saving rates
The average salary in the Philippines is approximately 44,800 Philippine pesos. In December 2022, the gross savings rate of the Philippines was recorded at 10.8%, which is the same as the rate in the preceding quarter.
This represents the median remuneration, encompassing accommodations, transportation, and additional perks. The salaries in the Philippines exhibit significant variations among different professions.
Based on a poll conducted in the fourth quarter of 2022, more than 50% of households in the Philippines with savings belonged to the high-income bracket, earning 30 thousand Philippine pesos or more. Conversely, approximately 18 percent of households with an income below 10 thousand Philippine pesos reported having savings.
Main industries of the PH
The Philippines is a burgeoning market with a progressing economy. The country is comprised of a diverse range of industries that require fresh individuals to join their workforce. The sectors encompass oil, gas, and other valuable resources, technology; health care; tourism; and hospitality, among others. The real estate sector is a prominent industry in the Philippines.
The robust economic growth and expanding population in the Philippines have resulted in a rising need for available condominiums and residential properties for sale. The nation’s construction sector is one of its most significant, employing a substantial workforce and making a substantial contribution to economic expansion.
The construction sector in the Philippines is a robust business with a market value of $54.5 billion. As of June 2021, it provides employment opportunities for over 45 million individuals. The sector in question holds significant importance within the nation’s economy, as it catalyzes several other industries, including manufacturing and retail.
The Philippines is a highly popular tourist destination in Asia. Preliminary calculations indicate that the number of individuals who visited the nation before the onset of the epidemic exceeded 8 million. As per the Philippine Statistics Authority, the tourism sector contributes 5.2% to the nation’s gross domestic product and will employ around 4.9 million individuals in 2021. Additionally, numerous jobs are generated by enterprises that serve tourists.
The Philippines has emerged as a prominent center for business process outsourcing (BPO) businesses and the service sector, particularly in the healthcare field, owing to its abundant supply of highly qualified English-speaking workers. Currently, the number of Filipinos employed in contact centers exceeds 1.4 million. It is projected that by the end of 2022, these call centers will contribute over $29 billion to the economy.
In the Philippines, the manufacturing industry is currently the leading sector, surpassing other industries, with a significant share of 65.5% in total investments during the third quarter of 2021.
The manufacturing industry refers to the collective processes and activities involved in transforming raw materials into final products. This encompasses a wide range of industries, spanning from the processing of food to the manufacturing of automobiles, computers, and even garments.
The advent of e-commerce has facilitated the acquisition of goods and services by individuals without necessitating their physical presence outside their residences. E-commerce has emerged as a prevailing influence in the retail sector, particularly for individuals seeking convenience and cost-effectiveness.
The Philippine government aims to enhance its position as a worldwide e-commerce leader by raising e-commerce revenue to $24.2 billion, as stated by the Department of Trade and Industry (DTI).
The retail sector in the Philippines is a leading business due to its substantial scale, wide range of offerings, and promising prospects for expansion.
The Philippines boasts a population of over 100 million individuals, providing the country with substantial potential for increased levels of consumer expenditure. The retail industry in the Philippines sustains a workforce of over 4 million employees and generates billions of dollars in annual revenue through the collection of sales taxes and income taxes from workers.
Major exports and export destinations
According to OEC, the primary exports of the Philippines include integrated circuits ($27.5 billion), office machine parts ($11.1 billion), insulated wire ($3.05 billion), electrical transformers ($2.49 billion), and semiconductor devices ($2.44 billion). These exports are mainly sent to China ($15.1 billion), the United States ($13.3 billion), Japan ($11.5 billion), Hong Kong ($11.4 billion), and Singapore ($6.19 billion).
In 2021, the Philippines held the position of the largest global exporter of nickel ore, with a value of $1.5 billion, and gold-clad metals, with a value of $62.5 million.
Major imports and import destinations
The primary imports of the Philippines consist of integrated circuits valued at $14 billion, refined petroleum valued at $9.04 billion, office machine parts valued at $3.11 billion, broadcasting equipment valued at $2.84 billion, and cars valued at $2.77 billion. These imports are predominantly sourced from China ($48.9 billion), Japan ($10.4 billion), South Korea ($9.23 billion), Indonesia ($9.21 billion), and the United States ($8.16 billion).
The Philippines held the position of the largest global importer of iron sheet piling, with a value of $284 million, and copra, with a value of $32.8 million, in 2021.
FDI, Current account, and gross external debt
The Philippines had substantial growth in its external debt, as indicated by the most recent data from the central bank. The figures reveal a 10.12 percent rise as of the end of September, reaching $118.833 billion. This represents a $10.923 billion increase compared to the same period last year when the debt stood at $107.91 billion. According to data from the Bangko Sentral  Pilipinas (BSP), the external debt increased by 0.8 percent or $915 million every quarter, reaching $117.9 billion by the end of June this year.
The UNCTAD’s World Investment Report 2022 reveals that foreign direct investment inflows to the Philippines rose from USD 6.8 billion in 2020 to USD 10.5 billion in 2021, surpassing the Central Bank of the Philippines’ annual objective of USD 8 billion. In 2021, the amount of foreign direct investment (FDI) stock experienced a significant rise, reaching a total of USD 113 billion.
The Bangko Sentral ng Pilipinas (BSP) has updated its balance of payments (BoP) forecasts, anticipating a current account deficit of $19.1 billion, equivalent to 4.6% of the gross domestic product in 2022. The current projection contrasts with the March estimate of a $16.3 billion shortfall for this year, equivalent to 3.8% of the gross domestic product (GDP).
Government debt and foreign debt
The current outstanding debt amounts to $254.99 billion, which represents 58.3% of the gross domestic product (GDP) as of June 2023. Domestic debt stands at $174.80 billion, which accounts for 40.0% of the country’s GDP as of June 2023. The external debt of the country amounts to $80.19 billion, which is equivalent to 18.3% of the GDP as of June 2023. The gross external debt for the fiscal year 2021–22 amounts to $111.3 billion, which is equivalent to 27.5% of the country’s GDP.
As of the end of September, the Philippines’ external debt reached a record-breaking amount of $118.83 billion. According to the Bangko Sentral ng Pilipinas, this increase is a result of the national government’s increased borrowing and statistical adjustments.
According to BSP data, the Philippines’ foreign debt increased by over 10 percent in the nine months compared to the previous year, reaching a figure of $107.91 billion.
End Note
Conclusively, the Philippines has a multifaceted economic profile characterized by both encouraging development indicators and enduring problems. Although the country’s nominal GDP is ranked high on a worldwide scale, there are significant issues with income inequality, high poverty rates, and hurdles in human development indices, which provide a more complex and detailed perspective. The Philippines is categorized as a lower-middle-income nation, and despite making progress in terms of economic expansion, a substantial segment of the populace still falls below the poverty threshold. The imperative to tackle social inequalities, improve education and healthcare, and promote inclusive economic development underscores the persistent challenge of uplifting the nation and countering the perception of it as a poverty-stricken country.
