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Philippine Economy

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The Philippine economy is considered one of the most dynamic economies in the East Asia Pacific region. Solid economic fundamentals and a competitive workforce drive the growth momentum of its economy. The country’s average annual gross domestic product (GDP) growth accelerated to 6.4% between 2010 to 2019. 

However, the Philippine GDP contracted by a record 9.6% in 2020, as the country imposed prolonged lockdowns to contain the Covid-19 spread. Stringent quarantine measures led to significant decreases in consumption and investment growth. It further caused a dramatic slowdown in exports, tourism, and remittances. 

However, in 2021 the Philippine economy expanded by 5.7% and returned to its pre-pandemic levels and even climbed to 7.6% growth in 2022.

The Philippine government aims for GDP growth rates of 6–7% in 2023 and 2024. The IMF is predicting 5.3% and 5.9%, respectively.

Philippine GDP Annual Growth Rate (in %)

The Philippines’ population is currently about 112.8 million, with a median age of 25.0 years.

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Unemployment rates in the Philippines are on the decline. According to the Philippine Statistics Authority (PSA), the nation’s unemployment rate declined to 3.6% in November 2023 from the 4.2% in the previous month Pre-Pandemic, the Philippines’ unemployment rate stood at 5.3% in 2018 and 5.1% in 2019.


Philippine
Unemployment Rate (in %)

Currency and Central Bank

The Philippine peso (PHP), also referred to as piso in Filipino is the country’s official currency. It is subdivided into 100 centavos or sentimos. Prior to the adoption of the Filipino language on banknotes and coins in 1967, the English word peso appeared on Philippine money. 

The Bangko Sentral ng Pilipinas (BSP), serves as the country’s central bank. The BSP was established in 1993 in accordance with Republic Act 7653 or the New Central Bank Act of 1993. This was later amended under Republic Act 11211 or the New Central Bank Act of 2019.

Average inflation in the Philippines in 2021 stood at 3.9% and 5.8% in 2022. The Development Budget Coordination Committee (DBCC) estimates the inflation rate for 2023 to be 6%. The DBCC expects the inflation rate to return to the target range of 2% to 4% in 2024 until 2028.


Philippine
Inflation (in %)

 

Industry and Trade

Services, industry, and agriculture are the main sectors of the Philippine economy. Food processing, cement, iron, and steel production, and telecommunications are among the country’s most significant contributors. 

The services sector makes an enormous contribution to the country’s GDP at around 61% and provides about 58% of the nation’s labour force. Over the past years, the sector has expanded tremendously, particularly in telecommunications, business process outsourcing (BPO), and finance. 

The BPO boom in the Philippines is attributed to several outsourcing advantages that companies enjoy, such as high spoken English proficiency, a highly educated labour force, and lower operational and labour costs. 

The Philippines’ industry sector is second in GDP contribution with about 29% and employs 18% of the total workforce. Among the country’s major manufacturing activities are industrial food processing, cement, glass, chemicals production, and iron and steel manufacturing. 

Lastly, the agricultural sector’s contribution to the GDP has continued to decline in recent years and is currently at 9.5%. However, it still provides employment for almost 24% of the labour force. Coconut, sugar, and rice are among the top agricultural products of the Philippines. 

The country is currently ranked 44th globally in terms of total exports, with integrated circuits, office machine parts, insulated wire, semiconductor devices, and electrical transformers as its main export products. Its top export partners are China, the US, Japan, Hong Kong, and Singapore. 

Philippine economy Balance of Trade

Meanwhile, the Philippines is 33rd in total imports and its top import products are integrated circuits, refined petroleum, cars, crude petroleum, and broadcasting equipment. China, Japan, South Korea, the US, and Singapore are its main import partners.  

Stock Exchanges and Capital Markets

The Philippine Stock Exchange or PSE is the country’s sole stock exchange. It was formed following the merger between the Manila Stock Exchange and the Makati Stock Exchange in 1992. PSE has been operating since 1927, making it one of the oldest stock exchanges in Asia.

The PSE Composite Index or PSEi is the main index of the Philippines. It comprises 30 of the largest and most active stocks listed on the exchange. These companies were chosen based on a set of public float, liquidity, and market capitalisation criteria. 

The PSE has a total market capitalisation of $273.802 bn as of October 2023. Exchange-Traded Funds (ETFs) are offered via the First Metro Philippine Equity Exchange Traded Fund, Inc. 

Bond Market

The Philippine domestic bond market is constituted of short- and long-term bonds issued mainly by the national government. Treasury notes and bonds dominate the market. Although the Philippine corporate bond market is still small compared to government bonds, it has grown rapidly over the years.

In 2020, government bonds gave the Philippine bond market a boost in the midst of the pandemic and this trend has continued.

According to the Asian Development Bank (ADB), the Philippine bond market experienced the fastest quarter-on-quarter growth in the first quarter of 2021 among emerging East Asia countries due to higher government borrowings. 

In the same year, the local currency bond market grew by 14%, reaching $190 bn in outstanding debt securities. Government and corporate bonds comprised 85.5% and 14.5% of the market, respectively.

In the second quarter of 2023, Philippines’ local bond market grew 8.3% year-on-year to P11.7 tn, led by both government and corporate bonds, according to the ADB.

In 2023, the Philippines expanded its bond avenues to serve the Middle Eastern and Islamic instrument investors by issuing maiden Sukuk bonds.

Real Estate Market

The Philippine real estate market has grown significantly between 2010 to 2018 as a result of the economic growth and expansion of the middle class. 

However, the Covid-19 pandemic has taken its toll, but with the revival of the Philippine economy, the property market is experiencing an upward trend again. According to Lamudi, the leading real estate platform in the Philippines, there is a high demand for rental properties in the Philippine real estate market. Especially property seekers from abroad are entering the market, a trend that has been on the rise since Q4/2021, according to the platform’s observations.

“More and more developed countries are undoubtedly setting their sights on building a Philippine base, which means that the domestic real estate market is expected to be busier than ever,” said Philippines Country Head Anurag Verma.


Philippine
Housing Index (in %)

 

Residential property prices surged by 12.9% year on year in the third quarter of 2023, amid the consistent expansion of housing loans across the country, according to the latest release of the BSP’s Residential Real Estate Price Index. The rate of growth slowed from the 14% year-on-year growth in Q2 2023. The BSP revealed that by area, residential property prices climbed in the National Capital Region (NCR) and in areas outside of the NCR.

 

Source of charts: tradingeconomics.com

Key Growth Indicators

2024 Projected real GDP (% Change): 5.9
2024 Projected Consumer Prices (% Change): 3.2
Country Population: 112.893 million
IMF, as of October 2023

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