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Philippines (the)

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Economic and political overview

Economic Overview

The Philippines' economy is considered one of the most dynamic in East Asia and the Pacific. After a strong post-pandemic rebound in 2022, the Philippine economy moderated in 2023, growing by 5.5%. Growth recovered to 5.8% in 2024, driven by strong public consumption and public construction, though partially offset by the El Niño weather phenomena and subdued private consumption. Economic activity is expected to pick up to 6.1% in 2025, with potential output estimated between 6.0% and 6.3% over the medium term. Consumption growth will be supported by lower food prices and the upcoming midterm elections, while investment growth is expected to rise due to sustained public investment and gradually declining borrowing costs (IMF).

Concerning public finances, the budget deficit averaged 5.1% in the first three quarters of 2024 and came in within the PHP 1.52 trillion ceiling for the year as a whole (government figures). The 2025 budget plans a 10% increase in government spending to a record PHP 6.33 trillion (USD 109.2 billion), higher than the previously projected PHP 6.18 trillion. Revenue is forecast at PHP 4.64 trillion, with a budget deficit of 5.3% of GDP. The education sector receives the largest allocation at PHP 1.053 trillion, followed by the public works ministry at PHP 1.034 trillion. The national government debt increased marginally from 56.5% of GDP at the end of 2023 to 57.6% in 2024 and is projected to remain stable over the forecast horizon (IMF). The current account deficit narrowed to 2% of GDP in 2024 as per the latest IMF estimates, supported by lower commodity prices, a recovery in tourism and business process outsourcing sector receipts, and a slight increase in inward remittances. The Philippines has maintained its 2024 inflation rate target at an average of 3.2% (data National Economic and Development Authority). The IMF expects inflation to average 2.8% in 2025, with higher electricity rates offset by reduced rice tariffs and other non-monetary measures to lower food prices. Over the medium term, investment is anticipated to be supported by an acceleration in public-private partnership projects and FDI, following recent legislative reforms.

Unemployment – at 4.4% in 2024 - remains below pre-pandemic levels, with employment gains recorded primarily in the construction sector. However, significant job losses occurred in agriculture, reflecting the impact of El Niño. Real wages recovered in 2023-24 from a record low in 2022 and surpassed pre-pandemic levels for the first time in July 2024. The country’s GDP per capita (PPP) was estimated at USD 12,079 in 2024 by the IMF and income inequality is still high. Poverty is expected to continue declining, although extreme climatic events pose risks. Poverty incidence is estimated to have decreased from 17.8% in 2021 to 13.6% in 2024, with a further reduction to 11.3% expected by 2026, based on the World Bank’s poverty line of USD 3.65/day (2017 PPP) for lower-middle-income countries.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 437.15470.06507.67550.00595.30
GDP (Constant Prices, Annual % Change) 5.55.86.16.36.3
GDP per Capita (USD) 3,9064,1544,4394,7585,096
General Government Balance (in % of GDP) -4.4-3.8-3.9-3.0-2.4
General Government Gross Debt (in % of GDP) 56.557.658.258.057.1
Inflation Rate (%) 6.03.33.03.03.0
Unemployment Rate (% of the Labour Force) 4.44.45.25.25.2
Current Account (billions USD) -11.21-10.40-9.16-8.53-8.43
Current Account (in % of GDP) -2.6-2.2-1.8-1.6-1.4

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

According to the latest data from the World Bank, the agricultural sector contributes to 9.4% of the Philippines’ GDP and employs around 22.4% of the labour force. Rice is the primary staple crop, with corn, coconut (the second-largest producer worldwide), sugarcane, bananas, and mangoes as significant contributors to the agricultural output. The country's fertile land and favourable climate conditions allow for the cultivation of a wide variety of fruits and vegetables, including pineapples, papayas, and vegetables such as eggplant and tomatoes. Livestock farming, including poultry, swine, and cattle, is also prominent, catering to domestic consumption and export markets. Despite the agricultural potential, challenges such as land reform issues, inadequate infrastructure, natural disasters, and climate change impacts persist, affecting productivity and sustainability in the sector. According to data from PSA, the full-year value of production in agriculture and fisheries at constant 2018 prices decreased by 2.2% y-o-y in 2024, to PHP 1.73 trillion. The farm sector’s poor performance last year was driven by declines in crop (-4.2%), livestock (-4.3%), and fishery (-1.1%) production. However, poultry output increased by 6.6%.

The industry sector contributes to 28.2% of GDP and employs 18% of the workforce. Industrial food processing is one of the Philippines' main manufacturing activities. The big industries are dominated by the production of cement, glass, chemicals products and fertilisers, iron, steel and refined oil products. While the sector's growth was halted in the initial stages of the pandemic, as response measures impeded manufacturing activity and reduced the global demand for industrial products, the Filipino industry showed a gradual recovery in the past few years. The logistics industry was particularly dynamic, driven by a recovery in both local and global demand in e-commerce, domestic manufacturing and the export sectors. In 2024, the annual average growth rate of the value of production index for manufacturing exhibited an expansion of 0.2%, while in terms of volumes, production increased by 0.9% (data PSA).

The tertiary sector - which represents 62.4% of GDP and employs 59% of the country’s workforce - has developed substantially, particularly in telecommunications, call centres and finance, business process outsourcing (BPO) and information technology services, with cities like Manila and Cebu emerging as global BPO hubs. Additionally, the tourism industry plays a significant role (5.95 million international visitors in 2024, generating a record turnover of PHP 760.50 billion, as per the Department of Tourism). The retail and wholesale trade sector is also prominent, reflecting the country's robust consumer market. Emerging sectors include fintech, e-commerce, and healthcare services, driven by technological advancements and evolving consumer preferences. With a young and tech-savvy population, the Philippines is poised to continue expanding its tertiary sector and diversifying its service offerings in the global market.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 22.4 18.5 59.2
Value Added (in % of GDP) 9.4 28.2 62.4
Value Added (Annual % Change) 1.2 3.6 7.1

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Philippine Peso (PHP) - Average Annual Exchange Rate For 1 USD 47.4950.4052.6651.8049.62

Source: World Bank - Latest available data.

 

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Foreign Trade

The Philippines is open to foreign trade, which represents around 67% of the country's GDP according to the World Bank. According to data from the Philippines Statistics Authority, by commodity group, electronic products remained the top export in 2023, generating USD 41.91 billion (56.9% of total exports). This was followed by other manufactured goods (USD 3.97 billion, 5.4%) and other mineral products (USD 3.12 billion, 4.2%). In 2023, exports of manufactured goods were the largest contributor, totalling USD 59.87 billion (81.3% of total exports), followed by mineral products (USD 7.14 billion, 9.7%) and agro-based products (USD 4.79 billion, 6.5%). Electronic products led imports, amounting to USD 26.64 billion (21.1% of total imports), followed by mineral fuels, lubricants, and related materials (USD 20.11 billion, 15.9%) and transport equipment (USD 12.45 billion, 9.9%). Imports of raw materials and intermediate goods were the largest share at USD 45.46 billion (36.0%), followed by capital goods (USD 35.72 billion, 28.3%) and consumer goods (USD 24.44 billion, 19.4%).

In 2023, the USA led as the country’s largest export partner, accounting for USD 11.55 billion, or 15.7% of total exports. Following closely were China, Japan, and Hong Kong, contributing USD 10.93 billion (14.8%), USD 10.46 billion (14.2%), and USD 8.84 billion (12%), respectively, highlighting the significant role of Asian markets in the country's export landscape. South Korea rounded out the top five with USD 3.53 billion, or 4.8% of total exports. In the same year, China was the largest supplier of goods, contributing USD 29.39 billion, or 23.3% of total imports. The top five import partners were rounded out by Indonesia (USD 11.51 billion, 9.1%), Japan (USD 10.29 billion, 8.2%), South Korea (USD 8.49 billion, 6.7%), and the USA (USD 8.42 billion, 6.7% - data PSA).

Traditionally, the country's trade balance has been in deficit due to high imports of raw materials and intermediate goods. According to WTO data, in 2023, the Philippines exported USD 72.9 billion worth of goods (-7.6% y-o-y) and imported USD 133 billion (-8.8% y-o-y). As with regards to services, the country's export value exceeded the import value by reaching USD 47.9 billion and USD 29.2 billion, respectively (+16.5% and +16.9% y-o-y). For the year as a whole, the Philippines' trade balance was estimated to be negative by 14.1% of GDP by the World Bank. According to preliminary figures from PSA, in 2024, the total value of exports amounted to USD 73.2 billion, marking a 0.5% decrease year-on-year, whereas imports amounted to USD 127.4 billion, up by 1%.

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 112,90990,751124,367145,867132,979
Exports of Goods (million USD) 70,33463,87974,61878,93072,918
Imports of Services (million USD) 28,22517,95619,53125,24829,262
Exports of Services (million USD) 41,26431,82233,57041,12747,946

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 68.858.263.572.467.4
Trade Balance (million USD) -49,312-33,775-52,806-69,701-65,899
Trade Balance (Including Service) (million USD) -36,272-19,909-38,767-53,806-47,200
Imports of Goods and Services (Annual % Change) 2.3-21.612.814.01.0
Exports of Goods and Services (Annual % Change) 2.6-16.18.011.01.4
Imports of Goods and Services (in % of GDP) 40.533.037.744.040.7
Exports of Goods and Services (in % of GDP) 28.425.225.828.426.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) -1.87.98.48.28.1
Volume of imports of goods and services (Annual % change) 5.811.69.510.110.0

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
The Philippines is a member of the following international economic organisations: IMF, Asia-Pacific Economic Cooperation (APEC), ICC, Association of Southeast Asian Nations (ASEAN), Colombo Plan, G-24, G-77, WTO, among others. For the full list of economic and other international organisations in which participates the Philippines click here. International organisation membership of the Philippines is also outlined here.
Free Trade Agreements
The Philippines is a member of Regional Comprehensive Economic Partnership (RCEP) signed on 15 November 2020. The complete and up-to-date list of Free Trade Agreements signed by the Philippines can be consulted here.
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
United States 15.7%
China 14.6%
Japan 14.3%
Hong Kong SAR, China 12.0%
Singapore 4.8%
See More Countries 38.6%
Main Suppliers
(% of Imports)		 2023
China 23.1%
Indonesia 9.2%
Japan 8.2%
United States 6.8%
South Korea 6.6%
See More Countries 46.1%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders

President: Ferdinand "Bongbong" MARCOS, Jr (since 30 June 2022)
Vice-President: Sara DUTERTE-Carpio (since 30 June 2022)

Next Election Dates
Presidential: May 2028
Senate: May 2025
House of Representatives: May 2025
Current Political Context
Ferdinand Marcos Jr., son of the former dictator who ruled the Philippines for two decades starting in 1965, has served as President since May 2022. Running alongside Sara Duterte for Vice President, he secured a decisive victory with 59% of the vote—the highest since his father’s era. His win brought the federalist Partido Federal ng Pilipinas to power for the first time, with his allies now dominating both chambers of Congress. However, throughout 2024, tensions between Vice President Sara Duterte and President Ferdinand Marcos Jr. escalated. After their alliance broke down over major disagreements, such as their divergent views on U.S.-China relations and Marcos' opposition to the brutal anti-drug campaign started by her father, former President Rodrigo Duterte, Duterte resigned in June from her positions as education secretary and head of an anti-insurgency body (although she kept her vice presidential position). In November, Sara Duterte stated that she had planned for Marcos, his wife, and his cousin, the Speaker of the House, to be assassinated if she were attacked, causing further tensions. In a public response, Marcos said he was prepared to fight back.
Concerning foreign policy, the Philippines has been at the centre of regional power disputes ever since China made its claim to the nine-dash line in 2009. Ferdinand Marcos Jr. turned toward the United States, siding with Washington to oppose Beijing, while Rodrigo Duterte sought stronger ties with China. Trilateral collaboration between Japan and the Philippines was created under Joe Biden, but as the Trump administration assumes office, uncertainty lurks. Fears of U.S. withdrawal have subsided with the nomination of Senator Marco Rubio as Secretary of State. Rubio, a vocal opponent of China, is anticipated to strengthen defence relations between the U.S. and the Philippines, which he considers essential for protecting Philippine territory and assisting in its economic recovery.
Main Political Parties
The Philippines has a multi-party system and political parties usually have diverse ideologies. As a result, parties generally work together to form coalition governments. The largest political parties in the country are:

- Lakas-Christian Muslim Democrats (Lakas-CMD): centre to centre-right, conservative political party with religious overtones
- Party-list Coalition Foundation, Inc. (PCFI): big tent, a coalition of representatives of political organizations with party-list representation in the House of Representatives
- Partido Demokratiko Pilipino (PDP): centre-left, democratic socialism, populism
- National Unity Party (NUP): centre-right, Christian democracy
- Nationalist People's Coalition (NPC): centre-right, social and liberal conservatism
- Nationalist Party (NP): centre-right, conservatism, populism. Oldest party in the country and historically dominated the political arena
- Partido Federal ng Pilipinas (PFP): populist, federalist
- Liberal Party (LP): centre to centre-left, liberal, endeavours to tackle poverty and promote economic growth.

Executive Power

The President is both the Chief of State and head of Government and is directly elected by a popular vote to serve a single six-year term without the possibility of re-election, even if non-consecutive. He or she presides over and appoints the Cabinet members, and is also the Commander-in-Chief of the Armed Forces. The President holds the executive powers which include the implementation of the law in the country and running the day-to-day affairs. If the President resigns, is impeached or dies, the Vice President assumes the presidency.

Legislative Power

The legislature in the Philippines is bicameral. The parliament, called the Congress, consists of: the Senate (the upper house) having 24 seats with its members elected mostly by popular vote to serve (renewable) six-year terms, and the House of Representatives (the lower house) having 316 seats, with its members elected by popular vote to serve three-year terms - with a limit of three consecutive terms. The President has the power to veto acts of the legislature, and in turn a supermajority (generally two-thirds) of legislators may act to override his veto. The people of the Philippines enjoy considerable political rights.

 

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