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Philippines (the)

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Economic and political overview

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The Philippines' economy is considered as one of the most dynamic economies in East Asia and the Pacific. In 2022, GDP grew by an estimated 6.5%, mainly due to an increase in private domestic consumption and fixed investment. However, although the Filipino economy has been recovering since the outbreak of the COVID-19 pandemic, recovery has yet to reach full momentum due to persistent downside pressures. According to the IMF, GDP growth is expected to slightly decrease to 5% in 2023 before picking up to 6% in 2024. Key economic drivers include solid fundamentals, a competitive workforce, a stable job market, steady remittances, and investment in the construction sector (World Bank).

The Philippines' public deficit reached 5.4% of GDP in 2022 and it is expected to decrease to 4.7% in 2023 and 3.7% in 2024. Public debt increased to 59.3% of GDP in 2022 and is expected to further increase in 2023 and 2024, to 61% and 61.2%, respectively. Inflation rate also increased in 2022, reaching 5.3% and surpassing the Central Bank’s limit of 4%, mainly due to higher commodity prices and global supply factors. However, according to the IMF, inflation is expected to decrease to 4.3% in 2023 and 3.1% in 2024. Domestic consumption is expected to remain the main driver of the economy, accounting for 70% of GDP. Institutional reforms are needed in business freedom, investment freedom, and rule of law, according to the Heritage Foundation. The COVID-19 crisis has revealed long-existing cracks in the country’ systems and institutions, and the government estimates that the Filipino economy could take a decade to return to pre-pandemic growth. Nevertheless, the Philippines have been gradually recovering following the initial impact of the pandemic, mainly boosted by the government’s policy reforms and expansionary fiscal program.

In 2022, the unemployment rate decreased to 5.7% - a trend that's expected to continue in 2023 (5.4%) and 2024 (5.1%). Inequality in wealth distribution and poverty rates are estimated to have worsened after the pandemic, pushing around 2.7 million more Filipinos into poverty, to a total of 23.7% of the population living in poverty. Nevertheless, one of the government's main goals is to reduce the poverty rate and increase equality among Filipino society.

 
Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 361.75394.09404.26440.90475.65
GDP (Constant Prices, Annual % Change) -9.55.77.66.05.8
GDP per Capita (USD) 3,3263,5763,6233,9054,166
General Government Balance (in % of GDP) -3.3-5.4-5.4-4.3-3.7
General Government Gross Debt (in % of GDP) 51.657.057.556.756.8
Inflation Rate (%) 2.43.95.86.33.2
Unemployment Rate (% of the Labour Force) 10.47.85.45.35.1
Current Account (billions USD) 11.58-5.94-17.83-11.05-11.31
Current Account (in % of GDP) 3.2-1.5-4.4-2.5-2.4

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

The Philippines' economy is based on food processing; production of cement, iron, and steel; and telecommunications, among others. According to the latest rates by the World Bank, the agricultural sector contributes to 10.1% of GDP and employs 22.9% of the labour force. The Philippines is the second largest producer of coconuts in the world. However, the agricultural sector suffers from low productivity, weak economies of scale and inadequate infrastructure. Still, the government is working on restructuring and modernising the sector, and have been implementing policies such as converting government lands to agriculture use. As for mining, the Philippines are one of the richest countries of the world in terms of minerals with an unexploited mineral wealth estimated at more than USD 840 billion (Inquirer). The Philippines reserves of copper, gold and zinc are also among the largest in the world. In 2021, Typhoon Odette hit the country, damaging hundreds of metric tons of rice crops and, despite efforts to improve production in 2022, the sector was still deeply affected by the lasting impacts of the typhoon.

The industry sector contributes 28.9% of GDP and employs 19.1% of the workforce. Industrial food processing is one of the Philippines' main manufacturing activities. The big industries are dominated by 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, he Filipino industry showed a gradual recovery in the past few years. The logistics industry was particularly dynamic, driven by recovery in both local and global demand in e-commerce, domestic manufacturing and the export sectors.

The tertiary sector - which represents 61% of GDP and employs 58% of the country’s workforce - has developed substantially, particularly in telecommunications, call centres and finance. Government goals for the sector include attracting investments in human resource development, design, R&D, finance, and infrastructure; bolstering manufacturing-derived services; and establishing new ecosystems linked with manufacturing (Department of Trade and Industry and Board of Investments). Although the services sector was hit the hardest during the pandemic, it showed a steady recovery in 2022, mainly driven by the wholesale, retail trade, information and communication, accommodation and food service activities, and human health and social work activities.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 22.9 19.1 58.0
Value Added (in % of GDP) 10.1 28.9 61.0
Value Added (Annual % Change) -0.3 8.5 5.4

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

Foreign trade represented 63.5% of the country's GDP in 2021, according to the World Bank. Main exports included electronic integrated circuits and microassemblies (32.3%), automatic data processing machines and units (5%), wires and cables (3.6%), printing machinery (3.4%), and copper (3%); while imports are focused on electronic integrated circuits and microassemblies (12.4%), petroleum oils (7.5%), telephone sets (2.7%), coal (2.3%), and machine parts and accessories (2.1%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services increased by 4% in 2022 and is expected to increase by 4.5% in 2023, while the volume of imports of goods and services increased by 14.9% in 2022 and is expected to increase by 5.7% in 2023.

Main export destinations include the U.S., China, Japan, Hong Kong, and Singapore; while main imports arrive from China, Japan, South Korea, Indonesia, and the U.S.. The main risk factor to foreign trade in the Philippines and countries in the region is the trade dispute between the U.S. and China, which slows exchanges in the world. The Philippines has recently lifted quantitative restrictions on imports of all food products, including rice. However, Tariff-Rate Quotas still remain on a number of sensitive products such as corn, poultry meat, pork, sugar, and coffee. The country is part of a number of trade agreements, including the Asia Free Trade Agreement, the Asia Europe Meeting (ASEM), the Japan-Philippines Economic Partnership Agreement (JPEPA), the ASEAN-Australia-New Zealand Free Trade Agreement; and the ASEAN-China Free Trade Area.

Traditionally, the country's trade balance has been in deficit due to high imports of raw materials and intermediate goods. The 2021 trade balance (including services) closed at USD - 38,7 million, while the trade deficit without services was higher, at USD - 52.8 million. Membership to ASEAN (the Association of Southeast Asian Nations) has played a key role in the Philippines' expanding commerce overseas and, as such, exports should increase in the coming years. According to WTO data, in 2021, the Philippines exported USD 74,6 million worth of goods and imported USD 124,3 million worth of goods. As with regards to services, the country's exports value exceeded the imports value by reaching USD 33,6 million and USD 19,4 million, respectively.

 
Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 101,901119,329117,37490,654124,386
Exports of Goods (million USD) 68,71369,30770,92763,76774,618
Imports of Services (million USD) 25,84526,27127,68617,74619,453
Exports of Services (million USD) 34,81338,37841,24531,39133,627

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

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 68.272.268.858.263.5
Trade Balance (million USD) -40,215-50,972-49,312-33,775-52,806
Trade Balance (Including Service) (million USD) -31,522-39,364-36,272-19,909-38,718
Imports of Goods and Services (Annual % Change) 15.114.62.3-21.613.0
Exports of Goods and Services (Annual % Change) 17.411.82.6-16.18.0
Imports of Goods and Services (in % of GDP) 38.641.940.533.037.8
Exports of Goods and Services (in % of GDP) 29.630.228.425.225.7

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change) 10.510.67.06.86.6
Volume of imports of goods and services (Annual % change) 13.216.610.67.27.5

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)		 2021
United States 15.9%
China 15.5%
Japan 14.4%
Hong Kong SAR, China 13.3%
Singapore 5.6%
See More Countries 35.4%
Main Suppliers
(% of Imports)		 2021
China 22.7%
Japan 9.5%
South Korea 7.7%
Indonesia 7.3%
United States 6.7%
See More Countries 46.2%

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
In May 2022, Filipinos went to the polls to cast their votes for the country's new president. Ferdinand "Bongbong" Marcos Jr, the son of a former long-serving president,  Rodrigo Duterte, won the elections and succeeded him in office, while Duterte’s daughter, Sara Duterte-Carpio, became vice-president. As an ideological ally of former President Duterte, President Marcos is expected to continue the policy course pursued by the Duterte administration.
Among his government's notable policies that should continue with the new administration, are the country's intense campaign against drug crime, the distancing from the U.S. to strengthen relations with China (even though some tensions linger with relation to territorial disputes in the South China Sea), and closer ties with neighbouring Indonesia and Malaysia. Combating maritime piracy and terrorist groups were other priorities, as well as the introduction of universal health-care (currently 93%) and free education from pre-school up to a basic university degree level, and boost the Filipino economy. Furthermore, Marcos intends to go on with his father's “Build, Build, Build” programme, a centrepiece of the Duterte administration, which aims to usher the “Golden age of  infrastructure” in the Philippines and boost economic development in the country. To do so, the government aims to further develop their relationship with China, as investments from the country have been a paramount for the success of the programme.
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:

- Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban): centre-left, democratic socialism, populism
- Nationalist Party (NP): centre-right, conservatism, populism. Oldest party in the country and historically dominated the political arena
- Nationalist People's Coalition (NPC): centre-right, social and liberal conservatism
- Lakas-Christian Muslim Democrats (Lakas-CMD): centre to centre-right, conservative political party with religious overtones
- Liberal Party (LP): centre to centre-left, liberal, endeavours to tackle poverty and promote economic growth
- United Nationalist Alliance (UNA): centre-right, Filipino nationalism, conservatism

Other notable parties include:
National Unity Party (NUP), Aksyon Demokratiko (Democratic Action), Pwersa ng Masang Pilipino (Force of the Filipino Masses PMP), Laban ng Demokratikong Pilipino (LDP), Kilusang Bagong Lipunan (New Society Movement KBL), Lapiang Manggagawa (Philippine Labour and Peasant Party).

Executive Power
The President is both the Head of State and 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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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in the Philippines please visit the Department of Health’s Updates on Novel Coronavirus Disease (COVID-19) website.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To find out about the latest public health situation in the Philippines and the current sanitary measures in vigour, please visit the Department of Health’s COVID-19 Advisories. The government has set up a community-driven contact tracing, health condition reporting and social distancing systems called StaySafe.
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the up-to-date information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Department of Finance and that of the Bureau of Customs.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to the Philippines on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For  information on the economic recovery scheme put in place by the Philippines government to address the impact of the COVID-19 pandemic on the national economy, refer to the Department of Finance’s "4-pillar socioeconomic strategy against COVID-19" and the website of the National Economic and Development Authority. Further details can be found on KPMG's website.
For a general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Philippine government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to the Philippines in the   IMF’s Policy Tracker platform.
Support plan for businesses
For information on the local business support scheme established by the Philippine government to help small and medium-sized companies to deal with the economic impacts of the COVID-19 epidemic on their activity, consult Department of Finance’s "4-pillar socioeconomic strategy against COVID-19", which provides some details about loans and support programs. KPMG Philippines offers an overview of the measures.
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.
Support plan for exporters
For the up-to-date information on possible support plans for exporters in the Philippines, if applicable, please consult the website of the Department of Trade and Industry.
 

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