Economy - overview: Philippine GDP grew 7.

6% in 2010, spurred by consumer demand, a rebound in exports and investments, and election-related spending, before cooling to 3.7% in 2011. The economy weathered the 2008-09 global recession better than its regional peers due to minimal exposure to troubled international securities, lower dependence on exports, relatively resilient domestic consumption, large remittances from four- to five-million overseas Filipino workers, and a growing business process outsourcing industry. Economic growth in the Philippines averaged 4.5% during the MACAPAGAL-ARROYO administration (January 2001 June 2010). Despite this growth, however, poverty worsened during her presidency. The AQUINO administration is working to reduce the government deficit from 3.9% of GDP, when it took office, to 2% of GDP by 2013. The government has had little difficulty issuing debt, both locally and internationally, to finance the deficits. The AQUINO Administration reduced public debt to below 50% of GDP and obtained several ratings upgrades on sovereign debt so that the Philippines is now close to investment grade. However, the lack of government spending, especially on infrastructure, was one of several factors which slowed GDP growth in the second half of 2011, leading the government to announce a stimulus effort and increased public spending on infrastructure in 2012. AQUINO's first budget emphasized education, health, conditional cash transfers for the poor, and other social spending programs, relying mostly on the private sector to finance important infrastructure projects. Weak tax collection, exacerbated by new tax breaks and incentives, has limited the government's ability to address major challenges. The AQUINO administration has vowed to focus on improving tax collection efficiency, rather than imposing new taxes, as a part of its good governance platform. The economy still faces several long-term challenges, including reliance on energy imports and foreign demand for overseas Filipino workers. Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.

The Philippines: Economic Update 2011

Philippines posts record GDP growth

The Philippine economy gre its fastest pace in 2010 expanding 7.3% th well surpassed the governme target of 5.0% to 6.0% and jumped up from growth of ju 0.9% in 2009, reported newspapers in the Philippine The Philippines seeks to attr more foreign investment and enable the long underperform economy to catch up with its developing Asian neighbors analysts.

The Philippine Star on Janua 10, 2011, reported that investment is expected to hit P610.4 billion by 2014 (201 posted a P505 billion investm according to the Board of Investments (BOI)'s managi head Cristino L. Panlilio and Philippine Economic Zone Authority (PEZA). The BO that they were hoping that investments from the public private partnership (PPP) wi boost the figure.

Philippines overtakes India as top call center capital of the World

A report from IBM released in October 2010 said the Philippines had this year passed India as the global leader in business process outsourcing in terms of the

number of people each country employed in the sector. "For business support functions ... the Philippines has taken over the lead in the global ranking from India, after having challenged the top position for several years," the report said. The IBM report did not present exact figures on how many people each country employed in the outsourcing industry but the head of the governments information technology commission, Ivan Uy, said the Philippines had definitely bypassed India in call centre revenues with $5.5 billion last year compared with Indias $5.3 billion.

The president of the Contact Centre Association of the Philippines, Benedict Hernandez, also said the Philippine more than half a million people working in call centers and related services compared with 330,000 in India. Hernandez said the Philippines, a former US colony, had an advantage due to its workforce being made up English speakers who had accents and a culture that is closer to those of many Western callers. Large centers can seen in Metro Manila, Cebu City, Davao and Angeles. According to The Economic Times, EXL has a centre in with more than 800 employees. IBM and Accenture are estimated to have more than 20,000. Convergys this year announced plans to hire about 3,000 people around Manila, while Sitel plans to hire 4,000. Aegis also acquired Philippine outsourcing company PeopleSupport for US$250 million in 2008. Uy said even Indian companies wer setting up call centers in the Philippines to take advantage of the Filipinos cultural links to the West. For examp Tata Consultancy Services, one of the largest Indian companies in the industry, announced in early 2011 that it h launched a business process outsourcing operation in Manila, its first in Southeast Asia.

Business process outsourcing call centers handle phone calls from customers abroad, including in the fields of lo finance, accounting and software research and programming, computer-aided design, animation and graphic desi human resource management, marketing analysis, legal processes and research, medical and legal transcription, c writing and preparation of legal briefs. The countrys surplus of nurses and other medical professionals can also b harnessed for the outsourcing of health care services such as hospital billing, management of medical health reco aftercare of patients, said the paper.

Some Challenges to face in 2011

Global Competitiveness Report 2010-2011 by the World Economic Forum (WEF) showed that the Philippines p 85th out of 139 economies for its global Competitiveness, slightly better than 87th place out of 133 in the year be report. Even though the country competitiveness slightly improved from last year, the country continues to lag be most Southeast Asian neighbors. (for more information, please see our article on Philippines' ranking globally)

Apart from the rankings, respondents to the WEF survey were also asked to select the five most problematic fact doing business in their country, on a list of 15 factors. The top most problematic factors for doing business in the

Philippines according to the report are: corruption, inefficient government bureaucracy, inadequate supply of infrastructure, policy instability and tax regulations.

The Aquino administration plans to double the Philippines infrastructure investments in the next six years by tap the private sector, as well, according to the National Economic and Development Authority (NEDA). Based on t agencys input to the State of the Nation Address of President Benigno Aquino 3rd, the new government will rais investments to a range of 25 percent to 28 percent of gross domestic product for the period 2011 to 2016, from th current 14 percent. To achieve this, NEDA said the government will increase spending on public infrastructure th greater private sector participation.

NEDA said the government aims to modernize the transportation sector and the logistics system for efficient mov of goods and people. The government plans to develop tourism infrastructure to provide access to major tourism destinations and spread economic development to other regions aside from Metro Manila.

To improve the Philippines competitiveness, the Aquino administration also aims to reduce the cost of electricit thereby reducing manufacturing costs in the country. NEDA said the government will enact a competition law and create a competition body to foster a culture of competition and enhance economic efficiency for job creation.

Other priorities for the next six years are promoting anti-corruption through legislative action, administrative me and wider collaboration with the public; improving health services and social protection services and increasing e through diversification and trade agreements.

Philippines Economy Profile 2012 Home > Philippines

Economy - overview Philippine GDP grew 7.6% in 2010, spurred by consumer demand, a rebound in exports and investments, and election-related spending, before cooling to 3.7% in 2011. The economy weathered the 2008-09 global recession better than its regional peers due to minimal exposure to troubled international securities, lower dependence on exports, relatively resilient domestic consumption, large remittances from four- to five-million overseas Filipino workers, and a growing business process outsourcing industry. Economic growth in the Philippines averaged 4.5% during the MACAPAGAL-ARROYO administration (January 2001 - June 2010). Despite this growth, however, poverty worsened during her presidency. The AQUINO administration is working to reduce the government deficit from 3.9% of GDP, when it took office, to 2% of GDP by 2013. The government has had little difficulty issuing debt, both locally and internationally, to finance the deficits. The AQUINO Administration reduced public debt to below 50% of GDP and obtained several ratings upgrades on sovereign debt so that the Philippines is now close to investment grade. However, the lack of government spending, especially on infrastructure, was one of several factors which slowed GDP growth in the second half of 2011, leading the government to announce a stimulus effort and increased public spending on infrastructure in 2012. AQUINO's first budget emphasized education, health, conditional cash transfers for the poor, and other social spending programs, relying mostly on the private sector to finance important infrastructure projects. Weak tax collection, exacerbated by new tax breaks and incentives, has limited the government's ability to address major challenges. The AQUINO administration has vowed to focus on improving tax collection efficiency, rather than imposing new taxes, as a part of its good governance platform. The economy still faces several long-term challenges, including reliance on energy imports and foreign demand for overseas Filipino workers.

Philippines Economy 2013 Outlook Outlook We have seen a much stronger than expected performance by the Philippines economy in 2012, with 7% in sight for this year, 2013. Sound policy developments and underlying fundamentals provide a solid foundation for confidence in the Philippines in the short term. Longer term, the challenge is for further economic reform to make sure that growth is sustainable. UK export growth of 21% topped off an excellent year for UK business but there are challenges to some

of our big ticket ambitions, especially infrastructure. What happened in 2012? The Philippines economy was one of the global star performers in 2012 with growth accelerating over 6%. This is well above the 3.7% in 2011 and above the average over the last 10 years (5%). Growth in Q3 of 7.3% was second only to China in Asia. The deficit is below 3% of GDP, and debt around 50% and declining. The description of the Philippines as the diamond of the region by an RBS economist in November has been proudly replayed by media and policymakers alike. One of the few outliers was Foreign Direct Investment (FDI), which remained flat and significantly behind other ASEAN countries. There were a number of factors in this success: including strong inflows of remittances from overseas contract workers, and international investment funds diversifying from less promising markets. But policy-makers have also steered a stable and sensible course. The Philippine central bank cut interest rates four times (now 3%) and introduced prudential regulations to fend off asset price bubbles in fast-growing sectors. On fiscal policy, President Aquino secured timely passage of the budget and brought forward infrastructure spending. He pushed through a number of important economic reforms, including landmark laws on reproductive health (in part to address the development impacts of high population growth) and alcohol and tobacco tax reform. The stock market rose 24% to become one of Asias top performers. The government bond rating is hovering just below investment grade and strong improvements have been recorded in WEFs International Competitiveness Survey (up another 10 ranks in two consecutive years) and

Transparency Internationals Corruption Index (up 24 ranks, and now better than Indonesia and Vietnam). The peso also strengthened by 6.2% in the past year. Most estimates suggest the economy will grow at around 7% in 2013. This is based on projections of robust consumer spending, private investments and public spending on infrastructure (though not on PPP). Election-related spending (the midterms are in May 2013, and there is traditionally a spike in spending by local politicians beforehand) will help too. On the reform side, Congress looks likely to remove airline taxes which have ended direct flights to the Philippines by European carriers. An overhaul of the national health insurance system is in the pipeline. But some other legislative bills such as anti-money laundering and anti-trust seem unlikely to make the statute books. Mining policy remains problematic, with the President reluctant to take on strong anti-mining interests: a new policy adopted last year will make it difficult to press ahead with large-scale projects. Foreign exchange appreciation poses challenges. Exporters and recipients of overseas remittances are concerned, as is the business process outsourcing (BPO) sector, which fears the impact on competitiveness. However, a stronger peso is helping deliver lower inflation, eg through cheaper oil imports and dollar loans. The central bank says it will not seek to run against the fundamentals, although it has hinted at strengthened capital controls to curb inflows of hot money. UK exports to the Philippines rose 21% in the first 10 months of 2012. London and Edinburghbased fund-managers increased their positions. Philippine Airlines major purchase of Airbus demonstrated the benefits to the UK of an increasingly self-confident Philippine private sector. UKTI ran a successful range of missions across a wide range of sectors, culminating in the December Smart Cities mission. Less encouragingly, was the reduced number of PPP projects the Philippine government bid out. The Philippines is genuinely doing well. The country enjoys clear competitive advantages. These include a young, English-speaking workforce, connectivity with other high-growth Asian markets, and a generally low cost-base. Investor concerns about other markets, will also continue to benefit the Philippines. However, it will be important that the heady growth does not sate appetite for economic reform. The Philippines remains over-reliant on overseas remittances and real estate, on a BPO sector which is world-class but delivers limited new jobs, and on a still underdeveloped manufacturing sector too narrowly focused around electronic components. Economic power is too concentrated and this holds back development. More needs to be done to diversify the economy and increase competition.