Académique Documents
Professionnel Documents
Culture Documents
The economy will slow in 2015 but still grow at a healthy pace. Support comes from
lower commodity prices, higher public spending and steady gains in both private
consumption and exports. Risks include a prolonged slowdown in Japan and China the Philippines' biggest trade partners. The economy faces serious gaps in
infrastructure but delays in Manila's public-private partnership programme prevent
implementation. Annual rates of economic growth should be around 6.0% in the
medium term.
KEY POINTS
Real GDP should grow by 4.9% in 2015 after gains of 6.1% in 2014. Positive
factors include lower commodity prices, higher public spending, and steady gains in
both private consumption and exports. Risks include a prolonged slowdown in Japan
and China - the Philippines' biggest trade partners.
Plans for public spending should ensure that real GDP will grow by around 6.0%
per year in the medium term. A danger is that the government will not fully
implement all its spending targets owing to bureaucratic obstacles.
Page 1 of 12
FACTS
Area
298,200 square kilometres
Currency
Philippine peso (Ps = 100 centavos)
Location
Composed of 11 large islands and some 7,000 smaller islands and atolls, the
Philippines lies some 800km off the coast of Indo-China, north-east of Papua New
Guinea and north of Indonesia. The group of islands is some 900km in length from
north to south.
Capital
Manila
GOVERNMENT
Head of State
President Benigno "Noynoy" Aquino (2010)
Head of Government
President Benigno "Noynoy" Aquino (2010)
Ruling Party
The government is led by the Liberal Party.
Political Structure
The Republic of the Philippines has an executive president who is elected for a sixyear term by universal mandate and then appoints a cabinet. Congress has two
chambers. The House of Representatives has 292 members elected for a three-year
term (of whom 80% are directly elected and 20% are selected from party lists).
The Senate has 24 members, elected for a six-year term by proportional
representation, half of them renewed every three years.
Last Elections
Presidential elections were held in May 2010. Noynoy Aquino took 42% of the vote,
defeating eight other candidates. Elections to the Senate and House were held in
May 2013. In the Senate, the United Nationalist Party now holds 5 seats as does
the Nationalista Party. The Liberal Party holds 4 seats and the National Peoples'
Coalition has 2 seats. Independents have 3 seats and the remainder are scattered
among several smaller parties. In House elections, the Liberal Party coalition took
113 seats while the United Nationalist Coalition gained 10 seats. The Nationalist
Peoples' Coalition received 43 seats and independents won 6 seats. The remainder
went to several smaller parties.
Page 2 of 12
Muslim areas of Mindanao. The army is also fighting the Abu Sayyaf Jihadist group
and other Muslims elsewhere in the country. Peace talks have been stalled for
several years.
In July 2014, the Supreme Court declared partly illegal a US$3.3 billion economic
stimulus fund that the president created in 2011 from budget savings. The decision
is slowing public spending and has hurt Aquino's reputation.
International Issues
In 2016, the ASEAN Economic Community (AEC) will be officially launched. The
organisation should give ASEAN members (including the Philippines) a greater role in
regional and global economic affairs.
The Philippines claim the Malaysian territory of Sabah which, it argues, was illegally
ceded to the new Malaysian state by Brunei. The dispute has been dormant since
the late 1970s, however. The Philippines also claims the Spratly Islands in the
South China Sea, where oil prospecting has been in progress.
Government Finance
Public debt in 2014 amounted to Ps4,712 billion. At that time, it represented 37.3%
of GDP. In real terms, public debt rose by 0.2% in 2014. The authorities are under
some pressure to accelerate the process of debt reduction. Measures to trim the
public debt include tighter oversight of government-controlled firms with large
liabilities and greater reliance on domestic capital sources.
The budget deficit has ranged between 2.0% and 2.6% of GDP in recent years.
Officials intend to hold the deficit to about 2% of GDP in 2015 despite additional
spending related to the earthquake and Typhoon Yolanda which hit in 2013.
In 2014, 43.5% of government expenditure went towards general public services
followed by spending on education (16.3%).
Chart 2 Public Debt: 2009-2014
ECONOMY
Page 3 of 12
is only about 3% per year but officials hope to double that over the next decade.
The Philippines is the world's largest importer of rice but Typhoon Yolanda
destroyed almost one million metric tons of the wet-season rice harvest in
November 2013. Rice imports will be increased to rebuild stocks. Agricultural output
barely meets domestic demand. Problems associated with El Nio conditions could
result in a poor harvest in 2015.
Manufacturing accounts for 20.3% of GDP and employs 8.6% of the workforce. The
country provides about 10% of the world's semiconductor manufacturing services,
including for mobile phone chips and micro-processors. Semiconductors account for
about three-fifths of exports. The Philippines has also overtaken major rivals such
as India as a global hub for business process outsourcing (BPO) - call centres,
accounting and information technology support. BPO operations employ more than 1
million people and its revenues are approaching US$20 billion. Manufacturing output
rose by 5.8% in 2014.
The service sector accounts for 57.1% of GDP and is performing better than other
parts of the economy. The sector is driven by real estate, financial services and
business process outsourcing. More than 600,000 are presently employed in call
centres and related activities. The real value of tourist receipts grew by 3.2% in
2014 and gains of 6.6% are expected in 2015. Manila hopes to lure gamblers away
from Macau with several huge new casinos that are under development. Gambling
revenues are predicted to rise by at least 20% per year through 2018.
The Philippines has valuable mineral deposits of copper, gold and chromate. High
metal prices continue to attract foreigners' interest. Total investments are
projected to reach US$18 billion by 2016. Seven major projects are expected to
boost mining output over the next several years. In 2012, the president signed a
new mining policy aimed at quelling concern over environmental damage. The new
policy is also designed to raise government revenues from mining, bringing in up to
US$12 billion over the next five years. The real value of mining output rose by
11.9% in 2014.
Foreign Trade
Exports remain an important contributor to growth but their share in GDP has
Page 4 of 12
declined in recent years. In 2014, exports represented 21.8% of GDP, down from
28.3% in 2008. Exports (in dollar terms) rose by 9.7% in 2014 and an increase of
4.8% is expected in 2015. Port congestion continues to be a problem for exporters.
Implementation of the ASEAN Economic Community by the end of 2015 could
provide a boost to exporters in the medium term.
Machinery and transport equipment accounted for 54.8% of all exports in 2014.
Other important exports include garments, wooden products and petroleum
products. In 2014, most of the Philippines' exports went to Japan (22.9%), the USA
(14.1%), China (13.0%) and the EU (10.9%). A problem for the Philippines is that
most exporters (including carmakers and producers of electronic products) depend
predominately on imports. Few domestic suppliers exist.
The current account surplus was 4.4% of GDP in 2014 and will widen to 4.6% in
2015. Imports have risen as the reconstruction effort proceeds but higher
remittances help to offset this increase.
Chart 3 Total Foreign Trade: 2009-2014
Economic Prospects
Real GDP should grow by 54.9% in 2015 after gains of 6.1% in 2014. Positive
factors include lower commodity prices, higher public spending, and steady gains in
both private consumption and exports. Risks include a prolonged slowdown in Japan
and China - the Philippines' biggest trade partners.
Inflation should be 1.5% in 2015, down from 4.2% in 2014. The central bank's
target range is 3-5%.
The real value of private final consumption rose by 3.8% in 2014 and an increase of
3.9% is expected in 2015. Remittances- which are crucial for consumer spending rose by 6.4% in 2014 and the government predicts even stronger gains in 2015.
Steady growth in employment and lower commodity prices also benefit
consumption.
The Philippine economy suffers from yawning gaps in infrastructure. Chronic power
shortages hold back the development of many industries. Delays in Manila's publicprivate partnership programme prevent implementation of many projects.
Institutional investors complain that a handful of dynastic local family groups secure
the bulk of PPP contracts. This is part of the reason why inflows of FDI are lower
Page 5 of 12
Page 6 of 12
(substantially higher than the current rate) - in order to raise productivity. Manila
plans more than US$17 billion of investments in roads and airports to spur growth.
BUSINESS ENVIRONMENT
Manila has made the elimination of corruption a centrepiece of its administration.
International economists estimate that officials collect less than 20% of the VAT
taxes that are due. This is one reason why tax revenues amount to less than 14%
of GDP - a much lower figure than in other Asian countries. Taxes will be raised
over the next two years to meet new spending plans. Officials also intend to push
collection rates up to 16-17% of GDP.
The government intends to promote more public-private partnerships to develop
infrastructure. Additional reforms to improve the investment climate are planned.
Manila currently has more than 60 potential projects in the pipeline, covering
highways, railways, light rail mass transit, classrooms, and hospitals. Nine projects
costing a total of US$2.9 billion were awarded in 2010-2014.
Businesses complain about delays in the implementation of key infrastructure
projects and the costs of complying with regulations related to customs, trade, and
labour markets. Small and medium-sized enterprises (SMEs) are underperforming.
Too much of the economy is concentrated in the hands of larger groups (or
government) while SMEs lack sufficient financing.
Table 1 Indicators of Business Environment: 2015
Ease of Doing Business Rank (out of 189)
95
Starting a Business
Time (days)
34
Procedures (number)
16
16.6
94
Procedures (number)
24
1.2
Getting Electricity
Time (days)
42
Procedures (number)
90.6
Registering Property
Time (days)
35
Procedures (number)
4.3
Employing Workers
Paid annual leave for a worker with 1 year of tenure (in working days)
Tax Rate
Page 7 of 12
42.5
20.5
14
193
36
VAT (%)
12
Exporting
Documents to export (number)
15
755
Importing
Documents to import (number)
15
915
4.2
Resolving Insolvency
Time (years)
2.7
Cost (% of estate)
32
Getting Credit
Strength of legal rights index (0-12)
Enforcing Contracts
Time (days)
842
Cost (% of claim)
31
Procedures (number)
37
Note: Data is sourced from the World Bank's Doing Business 2015. Doing Business
presents quantitative indicators on business regulations and the protection of
property rights - and their effect on businesses, especially small and medium-size
domestic firms. The data for all sets of indicators in Doing Business 2015 are from
June 2013 until June 2014 (except for paying taxes data which refers to JanuaryDecember 2013). Rankings are based on data sets across 189 countries. Note:
Extent of disclosure index is a measure of liability for self-dealing by directors.
ENERGY
The Philippines has negligible reserves of oil and natural gas. Manila is pushing
exploration in the South China Sea in areas claimed by China. The move threatens
to provoke a clash with Beijing.
Page 8 of 12
SOCIETY
Population
Total population reached 100 million in 2014 - more than double the figure for 1980.
The Philippines also has a much "younger" population than most other Asian
countries. The median age is presently just 23.1 years - much lower than that of
other countries in the region. In 2020, median age will be just 24.5 years
Fertility has been dropping but is still 3.0 births per female. This is far above
replacement level and significantly greater than the regional average. In 2020,
fertility is still expected to be around 2.8 births per female.
The Philippines is the second largest labour-exporting country in the world after
Mexico. Approximately 7.5 million Filipinos, or almost 9% of the total population, are
classified as "Overseas Filipino Workers" scattered in 182 foreign countries. This
number does not include the estimated 3 million migrant workers who are
undocumented and illegally working abroad.
Chart 6 Age Pyramid in 2014 and 2030
Page 9 of 12
Statistical Summary
2009
2010
2011
2012
2013
2014
Inflation
(%
change)
4.3
3.8
4.7
3.1
3.0
4.2
Exchange
rate (per
US$)
47.64
45.11
43.32
42.22
41.74
44.40
Lending
rate
8.6
7.7
6.7
5.7
5.8
5.5
GDP (%
real
growth)
1.1
7.6
3.7
6.7
7.1
6.1
8,026,143.3
9,003,480.0
9,708,333.0
10,561,089.0
11,542,285.8
12,642,736.2
GDP
(national
currency
Page 10 of 12
millions)
GDP (US$
millions)
168,484.7
199,590.9
224,129.7
250,115.0
276,559.4
284,757.6
Birth rate
(per '000)
25.3
25.0
24.8
24.6
24.4
24.2
Death rate
(per '000)
6.0
6.0
6.0
6.0
6.0
6.0
No. of
households
('000)
19,626.8
20,171.9
20,712.1
21,253.9
21,797.3
22,346.0
Total
exports
(US$
millions)
38,435.8
51,496.7
48,305.2
52,100.0
56,698.0
62,158.5
Total
imports
(US$
millions)
43,091.9
54,932.0
60,380.0
62,128.9
62,410.5
65,398.1
Tourism
receipts
(US$
millions)
2,330.0
2,630.0
3,152.0
3,483.9
4,282.9
Tourism
spending
(US$
millions)
2,698.0
3,416.0
3,646.0
4,076.6
4,723.5
Urban
population
('000)
44,560.0
45,473.2
46,438.6
47,454.0
48,515.5
49,615.9
Urban
population
(%)
48.5
48.7
48.9
49.1
49.3
49.6
Population
aged 0-14
(%)
35.6
35.2
34.8
34.4
34.1
33.8
Population
aged 15-64
(%)
60.7
61.1
61.4
61.7
62.0
62.3
Population
aged 65
(%)
3.7
3.7
3.8
3.8
3.9
4.0
Male
population
(%)
50.2
50.1
50.1
50.1
50.1
50.1
Female
population
(%)
49.8
49.9
49.9
49.9
49.9
49.9
Life
expectancy
male
(years)
64.4
64.5
64.6
64.7
64.8
64.9
Life
expectancy
female
(years)
71.1
71.2
71.3
71.5
71.6
71.8
Page 11 of 12
Infant
mortality
(deaths per
'000 live
births)
9.3
9.6
9.4
9.2
9.1
8.9
Adult
literacy
(%)
95.5
95.7
95.8
95.9
96.0
96.2
2014
Share (%)
2014
Share (%)
64.4
59.0
15.1
14.0
11.5
9.2
4.0
7.7
Exports (fob) to
Australasia
2.0
6.8
1.7
1.9
Page 12 of 12