Philippine

Economy
⦿ The Philippines is an archipelago of 7,107 islands.

⦿ Before the Spanish explorers came, Indo-Malays

and Chinese merchants had settled here. In 1521
the Spaniards, discovered the islands.

⦿ On June 12, 1898, Emilio Aguinaldo declared the

Philippines independent from Spain and
proclaimed himself president.

⦿ After ruling for 333 years, the Spaniards finally left

in 1898 and were replaced by the Americans who
stayed for 48 years.
⦿ On July 4, 1946, the Americans
recognized Philippine independence.

⦿ The Philippines is the third largest

English-speaking country in the world. The
country is divided into three geographical areas.

⦿ It has 14 regions, 73 provinces and 60 cities.

⦿ Capital: Manila
⦿ Ethnic Make-up: Christian Malay 91.5%, Muslim
Malay 4%, Chinese 1.5%, other 3%
⦿ Religions: Roman Catholic 83%, Protestant
9%, Muslim 5%, Buddhist and other 3%
⦿ Languages
⦿ Filipino is the official language of the
Philippines. In spite of being the national
language, only about 55 percent of Filipinos
speak the language.
⦿ In addition to Filipino are about 111 distinct
indigenous languages and dialects, of which only
about 10 are important regionally.
⦿ English is generally used for
educational, governmental and commercial
purposes and is widely understood since it is the
medium of instruction in schools.

⦿ The Philippines are the third largest group of

English speaking people in the world, after the
United States and the United Kingdom.

⦿ Since English is widely spoken in the Philippines,

it is common to hear Filipinos use a mixture
English and Filipino.

⦿ A steadily dwindling minority still speak

Spanish, which had at one time been an official
 Has Philippines been able
to catch up with rest of South
East ?
⦿ It was once expected that the Philippines would
be the economic powerhouse of Asia, but
instead it became one of its poorest countries.

⦿ After years of corruption and neglect, there

are, however, some tentative signs of
improvement in the Philippine economy.

⦿ After the Second World War, Philippines was

believed to become the economic powerhouse of
Asia, not Japan.
⦿ It was an American ally, it was a stable
Filipino-speaking country with a capable
workforce, and it had natural resources.

⦿ By the 1960s it had a per capita income that

was double that of Thailand, however
the opposite has happened, and Thailand
has almost twice the per capita income of
the Philippines.
⦿ Several hundred years of Spanish rule followed
by almost 50 years of US occupation created
enormous landed estates that are controlled by
a small group of families.

⦿ Agriculture employs 40% of the populace, often

on these estates, and produces 20% of GDP.

⦿ Reform and economic liberalization are vital

for the long term economy, but with the
landed families wielding so much economic
and political power major change is unlikely.
⦿ The Philippines also suffered an economic
recession in 1984 and 1985, reducing
economic conditions by as much as 10%.

⦿ Turbulence in the political area during

this time also had a negative impact on
the economy of the Philippines.

⦿ Lacking opportunities at home, Filipinos

have sought work elsewhere. Remittances
from overseas Filipino workers (OFWs) are
estimated to contribute close to 10% of
GDP.
⦿ In the US alone there are over four million
Filipinos, with a further two million in Saudi
Arabia.

⦿ One million Filipinos are sent out each year

through the overseas employment program.

⦿ In 2007 the International Monetary Fund

recognized the Philippines as being the 37th
largest economy in the world.

⦿ Its growth rate in 2007 was 7.3%, the best the

country has had thirty years.
⦿ Agriculture Products include rice, coconut
products, sugar, corn, pork, bananas,
pineapple products, aquaculture, mangoes,
and eggs.

⦿ Agriculture here suffers from low productivity,

low economies-of-scale, and inadequate
infrastructure support.

⦿ Industrial production is centered on processing

and assembly operations of the following items like
food, beverages, tobacco, rubber
products, textiles, clothing and
footwear, paints, plywood and veneer, paper and
paper products.

⦿ Heavy industries are dominated by production of

cement, glass, industrial chemicals, Fertilisers, iron
and steel and refined petroleum products.
⦿ The Philippines relies heavily on electronics
shipments for about two-thirds of export
revenues.

⦿ Although there has been some

improvement, over the years, local value added
of electronics exports remains relatively low at
about 30%.

⦿ Intel has been in the Philippines for 28 years as

major producer of Intel's advanced products
including the Pentium IV processor
⦿ Outsourcing industry is very huge in
Philippines.

⦿ In Mining it is well endowed with mineral and

thermal energy resources. Philippines
mineral exports amounted to $650 million.

⦿ Philippines is a world leader in renewable

energy sources. It has considerable
hydroelectric generation facilities, and has
created the world’s first commercial scale
geothermal energy installation.

⦿ Around a quarter of the Philippine energy

is generated from underground heat
sources.
⦿ Philippines economic development has been
very fast in recent years. However, in last three
decades, growth rate has been fastest.

⦿ Real gross domestic product for this time was

estimated to be 7 percent, but growth has
slowed down a bit in 2008, which came to about
4.5% because of world financial crisis.

⦿ Economic development in Philippines economy

has been because of high government spending.

⦿ A hard working service sector and large

allowance from millions of Filipinos working
abroad played an important role in
Philippines economic development.
⦿ There has been an increase in expenditure in
infrastructure of country. Economic prospects of
Philippines have grown, which in turn would
augur well for economic development at
Philippines.

⦿ Per capita GDP as was recorded in 2008 was

$3,400 and 4.5% is real growth rate in gross
domestic product.

⦿ Agricultural sector contributes about 13.8% to

GDP, 2008 of Philippines economy and 31.9%
is received from industry. From service
sector of Philippines economy contribution
towards Philippines GDP is about 54.3%.
⦿ 2009 fiscal is expected to bring not much of
turbulence as far as economic conditions in
Philippines are concerned.

⦿ It is expected that there would be an increase of 4.1

percent in gross domestic product for 2009 fiscal.

⦿ In first quarter of 2009 rate of growth of Philippines

GDP was 3.5 percent.

⦿ Philippines government had previously

estimated this rate to be within 3.7 to 4.4
percent.
⦿ Growth rate of GDP had gone down to 4.6
percent from 7.2 percent in 2007 fiscal.

⦿ It is being expected that rate of inflation

would go down to 6.4 percent in February
2009. It further depreciated to less than 4
percent as of April 2009.

⦿ It is also expected that in first quarter of 2009

fiscal exchange rate between United States
dollar and Philippines Peso was on its
downward slope.

⦿ In first quarter of 2009 fiscal 1 US dollar was

worth 48.50 Philippines Peso.
⦿ Philippines exports and imports
In 2008 total Philippines goods worth around $12
billion were exported to different countries. Total
export of services amounted to about $2 billion for
Philippines by 3rd quarter 2008.

Philippines exports were boosted by growth in export

of prepared tuna, petroleum naptha, and desiccated
coconut.

Philippines imported goods worth about $17 billion

by third quarter of 2008. Total import of services
increased from $2.4 billion in 2007 to more than
$2.5 billion. Major products to be imported were
cereals, cereal products, base metal, chemical
elements and compounds and transport equipments.
⦿ Philippines inflation

⦿ From a high inflation rate of 6.2 percent in

2007, inflation in Philippines fell to an
average of 2.8 percent in 2008.

⦿ It is expected that in 2009, inflation would

hover between 2.5 percent to 3.5 percent.
 Strong fiscal adjustment and a favourable global
environment had benefited the Philippine
economy

⦿ Growth in 2006 was driven by double-digit export

growth and private consumption.

⦿ There was a 6.3 percent growth in the service

sector, boosted in particular by the financial
sector and private services such as business
process outsourcing.

⦿ Agricultural output rebounded by 4.1 percent

growth.
⦿ Boosted by foreign capital inflow, the
Philippine stock market was among the top
East Asian performers.

⦿ Corporate profitability had increased indicating

that intentions to expand investment may be in
process.

⦿ FDI has grown significantly from a small base, to a

growing share of overall private investment.

⦿ Private services, particularly voice-based

BPO sectors such as call centers, grew
rapidly.
⦿ Poor infrastructure due to decades of fiscal
constraint and ineffective delivery caused in part
by governance shortfalls, and the high cost of
certain inputs, such as electricity.

⦿ The concentrated ownership structure of

corporate conglomerates created barriers to
investment. Many corporate were
comfortable investing only a portion of their
funds in- country, and invested considerable
portions offshore.

⦿ The combination of entry barriers and

underinvestment by incumbents were the
While the economy remains relatively resilient, the
GDP growth is expected to be 1.9 percent for
2009 and gradually recover in 2010.

⦿ Labor market conditions are expected to

deteriorate significantly in 2009 and through
2010.

⦿ Remittance flows have sharply decelerated

and are projected to post a moderate decline
in dollar terms for 2009.
Thank you