2.1.
3 Economic growth in the Philippines
Economic growth is one of the most important indicators of a healthy economy. One of the
biggest impacts of long-term growth of a country is that it has a positive impact on national income and
the level of employment, which increases the standard of living. As the country’s GDP is increasing, it is
more productive which leads to more people being employed. This increases the wealth of the country
and its population. Higher economic growth also leads to extra tax income for government spending,
which the government can use to develop the economy. This expansion can also be used to reduce the
budget deficit. Additionally, as the population of a country grows, it requires growth to keep up its
standard of living and wealth. Economic growth also helps improve the standards of living and reduce
poverty, but these improvements cannot occur without economic development. Economic growth alone
cannot eliminate poverty on its own. (Prateek Agarwal)
In measuring economic growth are extraordinary confusing. The reason for this is that the
discussion of what economic growth is, gets muddled up with how it is measured. Finding a measure
means finding a way to express a huge amount of relevant information in a single metric. First measure
the quantity and quality of all the many, many goods and services that get produced and then find a way
to aggregate all of these measurements into one summarizing metric. No matter what measure you
propose for such a difficult task, there will always be problems and shortcomings of any proposal you
might make. Two possible ways are measuring economic growth by tracking the ratio between people’s
income and the prices of particular goods and services and by tracking access to particular goods and
services. (Max Roser)
The Philippines is one of the most dynamic economies in the East Asia Pacific region. With
increasing urbanization, a growing middle class, and a large and young population, the Philippines’
economic dynamism is rooted in strong consumer demand supported by a vibrant labour market and
robust remittances. Business activities are buoyant with notable performance in the services sector
including the business process outsourcing, real estate, and finance and insurance industries. Sound
economic fundamentals and a globally recognized competitive workforce reinforce the growth
momentum. Having sustained average annual growth of 6.4 percent between 2010-2019 from an average
of 4.5 between 2000-2009, the country is on its way from a lower middle-income country to an upper
middle-income country in the near term. (The World Bank in the Philippines: Overview)
The industry drivers of the Philippine economy are the construction, tourism, manufacturing and
services industries. Within the manufacturing industry, petroleum, transport equipment, beverage
industries, and food are the top contributors to economic growth. (Philippine Primer, 4 Growing
Industries in the Philippines)
Due to the COVID-19 pandemic, the Philippines economic growth contracted in 2020, driven by
significant declines in consumption and investment growth, and exacerbated by the sharp slowdown in
exports, tourism and remittances. However, economic growth is expected to rebound gradually in 2021-
2022 with more robust domestic activity bolstered by greater consumer and business confidence and the
public investment momentum. (The World Bank in the Philippines: Overview)
Gross domestic product shrank 8.3% in the three months through December from a year earlier,
the statistics agency said Thursday. That compared with the median estimate for a 7.9% decline in a
Bloomberg survey and the third quarter’s revised 11.4% contraction. For all of 2020, GDP plunged 9.5%
as economists expected, the largest drop in government data going back to 1946. Still, the quarterly
figures indicate the decline has moderated from the early months of the outbreak. (Ditas B Lopez
and Cecilia Yap)
Figure: Record Plunge; Philippines suffered worst GDP contraction in 2020
Source: Philippine Statistics Authority, Bloomerge
Without doubt, the pandemic and its adverse economic impact are testing the economy like never
before. But unlike past crises, the Philippines is now in a much stronger position to address the crisis. The
strengths come from successfully enacting important, game-changing economic, social, and institutional
reforms that have better prepared the country for the unique challenges it faces today. These reforms have
also strengthened our ability to take decisive actions to help the economy survive this crisis and steer its
path towards inclusive and sustainable growth. (Karl Kendrick T.Chua)
