Economy of the Philippines

The Philippines is a developing country in South-East Asia. In 2004, it was ranked as the 24th largest economy by the World Bank according to purchasing power parity.

Important sectors of the Philippine economy include agriculture and industry, particularly food processing, textiles and garments, and electronics and automobile parts. Most industries are concentrated in the urban areas around metropolitan Manila. Mining also has great potential in the Philippines, which possesses significant reserves of chromite, nickel, and copper. Recent natural gas finds off the islands of Palawan add to the country's substantial geothermal, hydro, and coal energy reserves.

Background

Since the end of the World War II, the Philippine economy has had a mixed history of growth and development. Over the years, the Philippines has gone from being one of the richest countries in Asia (following Japan) to being one of the poorest. Growth immediately after the war was rapid, but slowed over time. A severe recession in 1984-85 saw the economy shrink by more than 10%, and perceptions of political instability during the Aquino administration further dampened economic activity. During his administration, President Ramos introduced a broad range of economic reforms and initiatives designed to spur business growth and foreign investment. As a result, the Philippines saw a period of rapid sustained growth, but the Asian financial crisis triggered in 1997 slowed economic development in the Philippines once again. In 1998, the Philippine economy deteriorated as a result of spill-over from the Asian financial crisis and poor weather conditions. Growth fell to about -0.5% in 1998 from 5% in 1997, but recovered to 2.9% by 1999. President Estrada tried to resist protectionist measures; and efforts to continue the reforms begun by the Ramos administration made significant progress. A major bank failure in April 2000 and the impeachment and subsequent departure of President Estrada in the beginning of 2001 led to lower growth. The current administration under President Gloria Macapagal-Arroyo is pushing towards faster and more rapid economic growth. In 2004, the Philippine economy grew by 6.1%, a pleasant surprise, beating most analysts and even the government's estimates. In 2005, the Philippine Peso posted an appreciation rate of 6%--the fastest in the Asian region for that year. However, the advent of high oil prices dampened the government's growth estimates for that same year as growth only amounted to 5.1%. As of the First Quarter of 2006, the Philippines posted a growth of 5.5%, making possible the government's goal of achieving its full year target growth.

Macro-economic trend

This is a chart of trend of gross domestic product of Philippines at market prices estimated by the International Monetary Fund with figures in millions of Philippine Pesos.

Year	Gross Domestic Product	US Dollar Exchange
1980	243,749	7.51 Pesos
1985	571,883	18.60 Pesos
1990	1,074,510	24.32 Pesos
1995	1,905,951	25.23 Pesos
2000	3,354,727	44.19 Pesos
2005	5,379,251	55.08 Pesos

For purchasing power parity comparisons, the US Dollar is exchanged at 11.91 Pesos only.

Industry

Industrial production is centered on processing and assembly operations of the following: food, beverages, tobacco, rubber products, textiles, clothing and footwear, pharmaceuticals, paints, plywood and veneer, paper and paper products, small appliances, and electronics. Heavier industries are dominated by the production of cement, glass, industrial chemicals, fertilizers, iron and steel, and refined petroleum products.

The industrial sector is concentrated in the urban areas, especially in the metropolitan Manila region and has only weak linkages to the rural economy. Inadequate infrastructure, transportation and communication have so far inhibited faster industrial growth, although great strides have been made in addressing the last of these elements.

Automotive

The ABS system used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. This is the first year (2005) ever that the Philippines will be exporting cars in quantity courtesy of Ford Motor Company.

Electronics

Intel has been in the Philippines for 28 years as major producer of Intel's advanced products including the Pentium 4 processor. A Texas Instruments plant in Baguio has been operating in for 20 years and is the largest producer of DSP chips in the world. TI's Baguio plant produces 100 % of all the chips used in Nokia cell phones and 80 % of all 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 HDD's.

Software

Trend Micro, an anti virus software PC- Cillin develops its "cures" for viruses in Eastwood Libis, Quezon City. When a virus breaks in any computer system in the world, they try to find a solution within 45 minutes of finding the virus.

Outsourcing

See main article: Business process outsourcing in the Philippines

The majority of the top ten BPO firms of the United States operate in the Philippines. Total jobs in the industry grew to 100,000 and total revenues are placed at $960 million for 2005.

Mining

The country is well-endowed with mineral and thermal energy resources. It produces 1931 MW of electricity from geothermal sources, second only to the United States^* and a recent discovery of natural gas reserves in the Malampaya 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 sulfur. 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 declines 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 went on a rebound starting in late 2004 when the Supreme Court deemed an important law permitting 100% foreign ownership of Philippine mining companies constitutional.

Transportation

Statistics

GDP: purchasing power parity - $430.6 billion (2004 est.)

GDP - real growth rate: 6.1% (2004 est.)

GDP - per capita: purchasing power parity - $5,000 (2004 est.)

GDP - composition by sector:
agriculture: 14.5%
industry: 32.3%
services: 53.2% (2003 est.)

Population below poverty line: 24.7% (2003 est.)

Household income or consumption by percentage share:
lowest 10%: 1.7%
highest 10%: 38.4% (2000)

Inflation rate (consumer prices): 6.0% (2004 est.)

Labour force: 34.56 million (2003)

Labour force - by occupation: agriculture 45%, industry 15%, services 40% (2003 est.)

Unemployment rate: 11.7% (2004)

Budget:
revenues: $11.56 billion
expenditures: $15.25 billion, including capital expenditures of $2.4 million NA (2003)

Industries: textiles, pharmaceuticals, chemicals, wood products, food processing, electronics assembly, petroleum refining, fishing

Industrial production growth rate: -0.1% (2003 est.)

Electricity - production: 45,21 GWh (2001)

Electricity - production by source:
fossil fuel: 70.12%
hydro: 10.75%
nuclear: 0%
other: 19.13% (1998)

Electricity - consumption: 42,040 GWh (2001)

Electricity - exports: 0 kWh (2001)

Electricity - imports: 0 kWh (2001)

Agriculture - products: rice, coconuts (copra), maize, sugarcane, bananas, pineapples, mangoes; pork, eggs, beef; fish

Exports: $38.728 billion f.o.b. (2004 est.)

Exports - commodities: electronic equipment, machinery and transport equipment, garments, coconut products, chemicals

Exports - partners: United States 20.1%, Japan 15.9%, Hong Kong 8.5%, Netherlands 8.1%, Taiwan 6.9%, Malaysia 6.8%, Singapore 6.7%, China 5.9% (2003)

Imports: $45.109 billion f.o.b. (2004 est.)

Imports - commodities: raw materials and intermediate goods, capital goods, consumer goods, fuels

Imports - partners: Japan 20.4%, US 19.8%, Singapore 6.8%, South Korea 6.4%, Taiwan 5%, China 4.8%, Hong Kong 4.3% (2003)

Debt - external: $56.16 billion (2003)

Economic aid - recipient: ODA commitments, $1.2 billion (2002)

Currency: 1 Philippine peso (P) = 100 centavos

Exchange rates: Philippine pesos (P) per US$1 = 50.045(2006), 53.10 (2005), 56.052 (2004), 54.203 (2003), 40.427 (January 2000), 39.089 (1999), 40.893 (1998), 29.471 (1997), 26.216 (1996), 25.714 (1995)

Fiscal year: Calendar year

External links

Economy of the Philippines | World Trade Organization member economies

Economía de Filipinas | Economia das Filipinas

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