Economic and Political Overview

flag Philippines (the) Philippines (the): Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response

 

Economic Outline

Economic Overview

The Philippines' economy is considered as one of the most dynamic in East Asia and the Pacific. Following a robust rebound from the pandemic in 2022, economic expansion slowed in the first half of 2023 owing to external challenges, fiscal underutilization, and the normalization of accumulated demand. However, after bouncing back in the second half of the year, total GDP growth was estimated at 5.3% by the IMF. This year, growth is projected to attain 5.9%, buoyed by an uptick in public investment and enhanced external demand for Philippine exports. The resurgence in private investment is expected to be gradual, given the need to deplete excess real estate inventory. The government's infrastructure initiatives, along with increased FDI opportunities and private sector involvement through Public-Private Partnership models, will gradually attract private investment and unlock a growth potential ranging from 6% to 6.5% over the medium term (IMF).

 
Concerning public finances, the budget deficit stood at 4.8% of GDP in 2023, down from 5.6% one year earlier. The 2024 budget proposal, ratified by the House of Representatives in September, targets a deficit of 5.1% of GDP. This consolidation primarily hinges on increased tax revenues and prudent management of current expenditures. The national government debt increased marginally from 57.5% of GDP at the end-2022 to 57.6% in 2023 and is projected to remain stable over the forecast horizon, driven mainly by a favourable interest-growth differential. Debt coverage at the national level is considered appropriate by the IMF, as local government units and social security institutions have surpluses. Inflation decelerated from its peak in early 2023, aided by domestic policy tightening, although there has been a recent uptick attributed to resurgent commodity prices, averaging 5.8%. Inflation is expected to converge to the target band in 2024 (3.2%) and 2025 (3%).

In 2023, the unemployment rate (4.7%) and underemployment rate remained close to their historical lows, with the labour force participation rate moving above its pre-pandemic levels although broader measures incorporating the informal labour market suggest some slack remains. The country’s GDP per capita (PPP) was estimated at USD 10,133 in 2023 by the World Bank but 22% of the population still lives below the poverty line (PSA, 2023). According to a 2022 report by the World Bank, the Philippines ranked 15th out of 63 countries in terms of income inequality. The top 1% of income earners accounted for 17% of the national income, while the bottom 50% only garnered 14%.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 404.28435.68475.95521.90574.43
GDP (Constant Prices, Annual % Change) 7.65.35.96.16.2
GDP per Capita (USD) 3,6243,8594,1694,5234,926
General Government Balance (in % of GDP) -5.6-4.8-4.3-4.0-3.5
General Government Gross Debt (in % of GDP) 57.557.657.757.456.4
Inflation Rate (%) n/a5.83.23.03.0
Unemployment Rate (% of the Labour Force) 5.44.75.15.15.1
Current Account (billions USD) -18.12-12.95-12.27-11.02-9.60
Current Account (in % of GDP) -4.5-3.0-2.6-2.1-1.7

Source: IMF – World Economic Outlook Database, Latest data available.

Note : (E) Estimated data

 

Main Sectors of Industry

According to the latest data by the World Bank, the agricultural sector contributes to 9.5% of the Philippines’ GDP and employs around 24% 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 expanded by 0.4% in 2023, marking the first time agricultural output posted growth after three straight years of decline.

The industry sector contributes to 29.2% of GDP and employs 19% 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 2023, the annual average growth rate of the value of production index for manufacturing exhibited an expansion of 5.9%, while in terms of volumes, production increased by 4.4% (data PSA).

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, 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 (5.45 million international visitors in 2023, still 44% below the pre-COVID level). 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) 24.3 18.7 57.0
Value Added (in % of GDP) 9.5 29.2 61.2
Value Added (Annual % Change) 0.5 6.5 9.2

Source: World Bank, Latest data available.

 

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Indicator of Economic Freedom

Definition:

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.

Score:
64,1/100
World Rank:
73
Regional Rank:
12

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

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.

Score:
5.93/10
World Rank:
54/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

See the country risk analysis provided by Coface.

 

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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 rebalancing of relations with the U.S., strengthening ties with China (even though some tensions linger with relation to territorial disputes in the South China Sea), and closer cooperation with neighbouring Indonesia and Malaysia. Despite the vulnerability of its relationship with Beijing due to disputes over territories in the South China Sea, in early 2023, both countries pledged to address the issue through "friendly consultations". Meanwhile, the Philippines maintains historical ties with and receives growing military support from the U.S.: in February 2023, amid tensions between China and the United States' ally Taiwan, the Philippines granted the United States expanded access to its military bases.
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 boosting 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 in the “Golden age of infrastructure” in the Philippines and boost economic development in the country. To do so, the government aims to further develop the relationship with China, as investments from the country have been paramount for the success of the programme.
Lastly, in November 2023, the House of Representatives Committees on human rights and justice adopted two resolutions urging the government to collaborate with the International Criminal Court (ICC) in its investigation into the Duterte administration's drug war.
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
- Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban): centre-left, democratic socialism, populism
- National Unity Party (NUP): centre-right, Christian democracy
- 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
- Partido Federal ng Pilipinas (PFP): populist, federalist
- Liberal Party (LP): centre to centre-left, liberal, endeavours to tackle poverty and promote economic growth.

Type of State
The Philippines is a multi-party presidential republic whereby the president is both the Head of State and of Government.
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.

 

Indicator of Freedom of the Press

Definition:

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.).

World Rank:
138/180
 

Indicator of Political Freedom

Definition:

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.

Ranking:
Partly Free
Political Freedom:
3/7
Civil Liberties:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of the Philippines, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, 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.

 

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Latest Update: February 2024