Philippines (the): Economic and Political Overview
In this page: Economic Outline | Political Outline
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) | 437.15 | 470.06 | 507.67 | 550.00 | 595.30 |
| GDP (Constant Prices, Annual % Change) | 5.5 | 5.8 | 6.1 | 6.3 | 6.3 |
| GDP per Capita (USD) | 3,906 | 4,154 | 4,439 | 4,758 | 5,096 |
| General Government Balance (in % of GDP) | -4.4 | -3.8 | -3.9 | -3.0 | -2.4 |
| General Government Gross Debt (in % of GDP) | 56.5 | 57.6 | 58.2 | 58.0 | 57.1 |
| Inflation Rate (%) | 6.0 | 3.3 | 3.0 | 3.0 | 3.0 |
| Unemployment Rate (% of the Labour Force) | 4.4 | 4.4 | 5.2 | 5.2 | 5.2 |
| 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, Latest data available.
Note : (E) Estimated data
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 data available.
Find more information about your business sector on our service Market Reports.
The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
See the country risk analysis provided by Coface.
President: Ferdinand "Bongbong" MARCOS, Jr (since 30 June 2022)
Vice-President: Sara DUTERTE-Carpio (since 30 June 2022)
- 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.
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.
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.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: February 2025
Reserved for registered profiles