Highlights on Household Population, Number of Households, and Average Household Size of the

Philippines (2015 Census of Population)

Reference Number:
2016-173
Release Date:
Thursday, December 29, 2016

Household population comprised 99.6 percent of the total population

 The household population of the Philippines reached 100.57 million persons in 2015. This is 8.48 million higher
than the 92.10 million household population reported in 2010, and 24.24 million more than the 76.33 million
household population posted in 2000.

 The household population comprised 99.6 percent of the total Philippine population, while the remaining 0.4
percent is comprised of the institutional population or those residing in collective or institutional living quarters
such as hospitals, orphanages, and military camps; and Filipinos in Philippine embassies, consulates, and missions
abroad. Refer to Table A and Figure 1.
Number of households increased by 2.80 million from 20.17 million in 2010 to 22.98 million in 2015

 The total number of households in the country in 2015 was recorded at 22.98 million, higher by 2.80 million
compared with 20.17 million in 2010 and by 7.70 million compared with 15.28 million in 2000. See Table B and
Figure 2.

 Among the country’s administrative 18 regions, Region IV-A (CALABARZON) had the most number of households
with 3.40 million, followed by the National Capital Region (NCR) with 3.10 million and Region III (Central Luzon)
 with 2.57 million. The Cordillera Administrative Region (CAR) posted the least number of households with 396
thousand. Refer to Table 1.

Average household size was 4.4 persons in 2015

 The country’s average household size (AHS) decreased from 4.6 persons in 2010 to 4.4 persons in 2015. In 2000,
there were 5.0 persons, on average, per household.

 The Autonomous Region in Muslim Mindanao (ARMM) registered the highest AHS of 6.1 persons, followed by
Region V (Bicol) with 4.8 persons. The lowest AHS was recorded in the NCR and Region XI (Davao), both with 4.1
persons.
The country's population increased by 15.83 million
The total population of the Philippines as of May 1, 2010 is 92,337,852 based on the 2010 Census of Population and
Housing. The census counts up to the barangay level were made official with the signing by President Benigno S.
Aquino III of Proclamation No. 362 on March 30, 2012.
The 2010 population is higher by 15.83 million compared to the 2000 population of 76.51 million. In 1990, the total
population was 60.70 million.
 Philippine Population
Census Year Census Reference Date
(in million)
2010 May 1, 2010 92.34
2000 May 1, 2000 76.51
1990 May 1, 1990 60.70

Population grew by 1.90 percent annually

The Philippine population increased at the rate of 1.90 percent annually, on the average, during the period 2000-2010.
This means that there were two persons added per year for every 100 persons in the population.

Average Annual Growth Rate

Reference Period for the Philippines
(in percent)

2000-2010 1.90
1990-2000 2.34

CALABARZON, NCR, and Central Luzon comprise more than one-third of the total population
Among the 17 regions, CALABARZON (Region IVA) had the largest population with 12.61 million, followed by the
National Capital Region (NCR) with 11.86 million and Central Luzon (Region III) with 10.14 million. The population of
these three regions together comprised more than one-third (37.47 percent) of the Philippine population.
Cavite topped in population size
Among the provinces, Cavite had the largest population with 3.09 million. Bulacan had the second largest with 2.92
million and Pangasinan had the third largest with 2.78 million.
Six other provinces surpassed the two million mark: Laguna (2.67 million); Cebu, excluding its three highly urbanized
cities Cebu City, Lapu-Lapu City, and Mandaue City (2.62 million); Rizal (2.48 million); Negros Occidental, excluding
Bacolod City (2.40 million); Batangas (2.38 million) and Pampanga, excluding Angeles City (2.01 million).
The provinces with a population of less than 100,000 persons were Batanes (16,604), Camiguin (83,807), and Siquijor
(91,066).
Four highly urbanized cities (HUCs) record more than one million population
Of the 33 highly urbanized cities (HUC), four surpassed the one million mark. Three of such HUCs are in NCR: Quezon
City (2.76 million), City of Manila (1.65 million), and Caloocan City (1.49 million). Outside NCR, only Davao City has a
population of more than one million (1.45 million).
The 2010 Census of Population and Housing (2010 CPH) was undertaken by the National Statistics Office in May-June
2010 pursuant to Batas Pambansa Blg. 72 and Commonwealth Act 591. About 82,000 fieldworkers, majority of who
were DepEd public school teachers, were deployed during the nationwide census taking in 2010. The 2010 CPH was
designed to take an inventory of the population and housing units in the Philippines nationwide and to collect
information about their characteristics. Information on the count of the population and living quarters were collected
with 12:01 a.m. of May 1, 2010 as the census reference time and date.
The population counts proclaimed by the President as official for all purposes were based on census questionnaires
accomplished by the enumerators all over the country. These questionnaires were processed in Census Processing
Centers using the Optical Mark Recognition (OMR) technology along with the Census Integrated Processing System
developed by NSO for this purpose.
The successful completion of census-taking was made possible with the support of the local and national officials,
government agencies, local government units, media, private agencies, and non-government organizations.
Making affordable housing possible
By Business Mirror Editorial

Driving around Metro Manila allows one to see the vast and positive transformation that has taken place in the
metropolis in the last 30 years. The skyline is packed with tall and modern commercial, office, and residential buildings.
The same is true in the country’s other urban centers like Cebu, Davao, Iloilo, Bacolod and many other booming
regional areas.

Property sector consulting firms that have been doing business in the Philippines for decades do not talk about
projections for one or two years down the road, but speak about where the country is headed 10 or even 20 years in
the future.

As in many other businesses—a good example being communication connectivity—the Philippines has been 20 or 30
years behind the world, and still is in many respects. Other nations, even those considered “developing” had landline
penetration of 80 to more than 90 percent when we were still figuring out how to make that happen. We never had
widespread fixed line communications because by the time we adopted a development program, mobile
communication made the telephone “obsolete.”

The backlog for 21st-century housing is staggering, providing for a continuing decades-long demand.

Much of the property development in the past 20 years has been both commercial and office space as it should be.
Businesses need a “home” so that they can provide employment opportunities, so that workers of all economic classes
can then afford to buy residential properties.
There is no question, though, that residential housing that has been developed only provided more supply to the
higher groups in the economic food chain. But the evolution of the property sector continues.

The Philippine Statistics Authority reported that construction activity increased by 10.4 percent in the first quarter of
2019 over the same period last year. That is good news. Private construction, rather than government, accounted for
82 percent of total construction activities. That is better news.

By type of construction, residential buildings accounted for 69.2 percent of the total. That is the best news.

Valid concerns, however, have been made that housing for the lower economic groups has been neglected. That is not
good news. The Organization of Socialized and Economic Housing Developers is an industry group that pushes for more
of this type of housing and has been doing this for 20 years. Ten private and nongovernment organizations formed an
alliance last year called the Socialized Housing Alliance Roundtable Endeavor (Share) to forge a stronger collective
partnership in this sector.

Both groups have asked the newly created Department of Human Settlements and Urban Development to establish
housing one-stop processing centers in every region to facilitate the issuance of construction permits. There’s also a
request that funds be set aside to make as soon as possible Section 23 of the DHSUD law operable regarding these
processing centers.

The government is good at “talking,” which is what passing a law really is. The “walking” part is getting these laws
properly implemented on a timely basis. Look how difficult it has been to get the “Ease of Doing Business” law into
action.
The Philippines is now in its 8th year of a house price boom
The Philippines’ residential property market continues to perform very well, due to robust economic growth. Makati
CBD property prices have risen by almost 132% from 2010 to 2018. Yet prices are not high, and yields are good, and
the Philippine economy is in the 8th year of strong growth.

The average price of a luxury 3-bedroom condominium unit in Makati

central business district (CBD) soared 15.55% (9.91% inflation-adjusted)
during 2018 to PHP230,000 (US$4,371) per square metre (sq. m.), from
y-o-y rises of 10.46% in 2017, 9.95% in 2016, 13.43% in 2015, 7.11% in
2014, 14.37% in 2013, and 10.06% in 2012, according to Colliers
International. During the latest quarter, condominium prices in Makati
CBD increased 5.02% (5.55% inflation-adjusted) in Q4 2018.

House prices continue to rise in other major Metro Manila CBDs:

 In Rockwell Center, the average price for a 3-bedroom

condominium rose by 10.6% (5.2% inflation-adjusted) to PHP244,500
(US$4,650) during 2018

 In Fort Bonifacio, the average price for a 3-bedroom condominium soared by 17% (11.3% inflation-adjusted) to
PHP205,500 (US$3,908) per sq. m over the same period.
However, house price growth is more muted nationwide. During the year to Q3 2018, the nationwide residential real
estate price index rose by 4.4% (-2.2% inflation-adjusted), according to the Bangko Sentral ng Pilipinas (BSP), the
country’s central bank. Quarter-on-quarter, the index dropped 0.6% (-2.8% inflation-adjusted) in Q3 2018. The
residential real estate price index, published every quarter, is based on bank reports on residential real estate loans.

By property type:

 Condominium units saw y-o-y price increase of 5.8% (-0.8% inflation-

adjusted) in Q3 2018 from a year earlier

 For single detached/attached house, prices rose by a meager 0.2% (-6.1%

inflation-adjusted) during the year to Q3 2018

 Duplex house prices surged 30.7% (22.5% inflation-adjusted) y-o-y in Q3 2018

 Townhouse prices rose by 18.3% (10.9% inflation-adjusted) over the same period

In the National Capital Region (NCR), residential property prices increased 6.8% (0.1% inflation-adjusted) during the
year to Q3 2018 while in Areas Outside the NCR (AONCR), prices rose by 2.2% (-4.2% inflation-adjusted), according to
the BSP.

Demand remains strong. In 2018, the take-up of pre-sold condominium uits throughout Metro Manila, including fringe
locations, reached 54,000 units – surpassing the previous record-high of 52,600 units in 2017, according to Colliers
International. This was mainly due to strong demand from starting families and young professionals and the influx of
Mainland Chinese in the Philippines. Household formation has increased by an average of 3% every year in the past five
years.

Residential property demand is expected to remain robust this year:

 “Colliers believes that pre-sales in 2019 will likely remain strong given the strong end-user demand. However,
topping the 2018 sales figures might be a challenge given Colliers’ projected slowdown in launches due to the
dearth of available developable land in Metro Manila and the continued acceleration of land prices in the
country’s key business districts.”

 “Local and foreign high net worth individuals continue to drive the residential sale market, typically securing the
biggest and most expensive units from high-end and luxury brands to maximize the value appreciation in major
markets,” said Jones Lang LaSalle in its 2018 report.

In 2018, the Philippine economy expanded by about 6.2%, according to the Philippine Statistics Authority (PSA). It was
lower than the average annual growth rate of 6.6% from 2012 to 2017 but still places the country as among the fastest
growing economies in Emerging Asia. The economy is expected to grow at a faster pace of 6.7% this year, amidst
improving macroeconomic conditions and slowing inflation, according to ADB President Takehiko Nakao.

Land values continue to appreciate

Land prices continue to rise in all major high-end residential areas, according to Leechiu Property Consultants:
  In Forbes Park, land prices surged almost 34% y-o-y to an average of PHP375,000 (US$7,123) per sq. m. in 2018.

 In Ayala Alabang, land prices increased 15.8% to an average of PHP110,000 (US$2,089) per sq. m. in 2018 from a
year earlier.

 In Dasmariñas Village, the average land value increased 8.4% to PHP374,000 (US$7,104) per sq. m. in Q1 2018
from the prior year.

 In Urdaneta Village, land values rose by 8% to an average of PHP270,000 (US$5,129) per sq. m. in Q1 2018 from
a year earlier.

Land prices are projected to continue rising in the medium term.

 LAND PRICES IN SELECTED HIGH-END RESIDENTIAL VILLAGES, 2010-Q1 2018

PHP per sq. m. USD per sq. m. Growth from 2010 to Q1 2018

Dasmariñas Village 374,000 7,104 316%

Forbes Park 300,000 5,698 275%

Urdaneta Village 270,000 5,129 286%

Corinthian 252,000 4,787 288%

Greenhills East 210,000 3,989 265%

Greenmeadows 160,000 3,039 286%

Valle Verde 150,000 2,849 216%

Ayala Alabang 95,000 1,804 222%

Hillsborough 58,000 1,102 314%

Source: Leechiu Property Consultants

Philippine residential property is still below pre-Asian Crisis values!

Surprisingly, despite so much price appreciation, the Philippine housing market has still not recovered from the crash
after the 1997 Asian Financial Crisis. Between 1997 and 2004, luxury condominium prices dropped 28% (52% inflation-
adjusted), in the biggest property crash of all countries affected by the Asian Financial Crisis.
In current price terms, both rental rates and property values are already
far above 1997 levels. However residential property prices in 2018 are
still 9% below pre-Asian Financial Crisis levels in real, inflation-adjusted
terms.

Residential construction activity rising

After a weak activity in 2017, residential construction has improved in

2018, based on figures from the Philippine Statistics Authority (PSA).

During 2018:

 The number of approved residential building permits rose by 3.6%

y-o-y to 114,905 units

 The floor area of residential building permits surged 27.5% y-o-y

to 20,783,947 sq. m.

 Total value of residential building permits increased 38.5% y-o-y

to PHP227.42 billion (US$4.33 billion).
During the year to Q4 2018, residential constructions increased for all types: residential condominiums (106.5%);
duplex/quadruplex (78.3%), apartments (27.2%) and single-type houses (25.2%).

Housing supply continues to rise

The total condominium stock in Metro Manila’s CBDs reached 118,870 units in 2018, up by about 11% from 107,100
units in 2017, according to Colliers. In 2018 alone, about 11,800 units were completed, down from 15,900 units
completed in 2017 but still up from an annual average of 7,500 units in the past ten years.

Fort Bonifacio and the Manila Bay Area accounted for the biggest share of condominium units delivered in Q4 2018 of
75%, buoyed by the strong demand from offshore gaming employees, as well as local and foreign investors. The major
residential projects completed in Fort Bonifacio were Avida Towers Verte, Central Park West, and Grand Hyatt
Residences by Federal Land. In the Manila Bay Area, Shore Residences Building 3 were already completed in Q4 2018,
which added about 2,000 units to the total condominium stock. In other business hubs such as Makati CBD, Rockwell
Center and Ortigas Center, completed residential projects included The Lerato Tower 3, Twin Oaks Place East Tower,
and The Proscenium at Rockwell’s Kirov and Sakura towers.

In 2019, about 9,300 units are expected to be completed, with about three-fourths of new supply coming from Fort
Bonifacio and the Manila Bay Area, according to Colliers.

RESIDENTIAL SUPPLY

Location Total Stock

 Alabang 4,230

Araneta Center 4,550

Eastwood City 8,540

Fort Bonifacio 32,230

Makati CBD 27,020

Manila Bay Area 19,850

Ortigas Center 17,940

Rockwell Center 4,510

TOTAL 118,870

Source: Colliers International

Residential rents rising; vacancy rates falling

Residential rents across CBDs are now rising, amidst strong local and foreign demand and falling vacancy rates.

During 2018:

 In Makati CBD, monthly residential rents rose by 2.6% y-o-y to an average of PHP824 (US$15.7) per sq. m.

 In Fort Bonifacio, monthly residential rents soared by 40% y-o-y to PHP1,134 (US$21.6) per sq. m.
  In Rockwell, monthly residential rents rose by 2.3% y-o-y to an average of PHP893 (US$17) per sq. m.

Rents are expected to remain almost steady this year, amidst a modest increase in supply.

“We see rents in Makati CBD, Fort Bonifacio, and Rockwell Center rising by 0.8% in 2019 despite the delivery of a
modest number of new units over the next 12 months,” said Colliers.

RENTAL RATES FOR A 3-BR CONDOMINIUM UNIT, 2018

Monthly Rent Y-O-Y change Q-O-Q change

Location PHP per sq. m USD per sq. m % %

Fort Bonifacio 624 - 1,020 12 - 19 40.0 0.7

Makatic CBD 550 - 1,098 10 - 21 2.6 0.6

Rockwell Center 744 - 1,042 14 - 20 2.3 0.7

Sources: Colliers International, Global Property Guide

In Metro Manila, the overall vacancy rate stood at 10.6% in Q4 2018, down from 10.8% in the previous quarter and
12.6% a year earlier, according to Colliers International.

Vacancy rates in Metro Manila are expected to fall further to about 10.5% this year and to about 10.3% by 2021, partly
due to developers’ slower completion of new units in the coming years.
“The stable take-up of units in the secondary market suggests that the market is driven by a strong end-user demand
and not by mere speculative demand,” said Colliers.

Gross rental yields remain high, but beware of taxes

According to research by the Global Property Guide, gross rental yields in Metro Manila remain good, ranging from
7.01% on the very smallest condominium units of 45 sq. m. to 7.16% on 80 sq. m. condominiums.

These yields are before taxes and other expenses. They are for the high-end areas: Makati CBD, Ortigas CBD, Rockwell,
The Fort, and Eastwood City.

This does not mean that foreign investors should necessarily rush to invest in Manila, because transaction taxes (known
as ‘capital gains taxes’, but not actually such), and (if observed) official income tax rates applicable to non-resident
investors, are high.

Interest rates rising; mortgage market remains small

Currently, housing loan rates charged by major commercial banks range from 4.99% to 7.5% for one-year fixed loans,
and from 7.5% to 9.75% for ten-year fixed mortgages. In March 2019, the BSP has kept its policy rate at 4.75% for
overnight borrowing, after raising it five times last year. The overnight lending and repurchase facility (RF) and deposit
facility were also held steady, at 5.25% and 4.25%, respectively.
Severe problems impede mortgage market growth. Few major banks offer housing loans. And although loan-to-value
ratios of 90% are now in theory being offered and loan tenors can be as long as 30 years, in fact most loans are short-
term. Banks are wary because land titling and registration problems are prevalent, as are lengthy delays in the
foreclosure process due to the country’s very weak court system. Therefore approval of loan applications takes a long
time. In addition inter-bank collusion prevails: different banks’ loans have strangely similar terms and conditions.

Property buyers also face high transaction costs, corruption and red
tape, fake land titles and substandard building practices. Plus, the large
informal housing sector and their incentives make it less attractive for
low to middle income families to buy or rent properties.
 Because of these factors, the ratio of residential mortgage loans to GDP
remains small, at around 3.85% of GDP in 2018, a slight increase from
2.03% of GDP in 2009. Most houses in the Philippines are sold for cash or
pre-sold, with the developers offering financing.

In 2018, the total outstanding residential real estate loans rose by 12.8%
to PHP677.1 billion (US$12.88 billion) from a year earlier, based on
figures from the BSP.

Manila’s segmented market

Lower down the income scale there is cause to worry.

There are three identifiable segments in Manila’s housing market:

 The high end. Local high-earners and expatriates occupy this segment.

 The middle tier. The mid-end condominium sector, with monthly amortization of around PHP10,500 (US$200),
presently requiring a dispensable income greater than PHP34,962 (US$665), to obtain a housing loan of PHP2
million (US$38,037). This segment has been targeted by many developers, and is attractive to overseas foreign
workers (OFWs).
  The low end. This is where the mass of the population live.

We believe that the middle tier is over-supplied. Many of these lower middle-class condominium developments are
ghost cities.

Manila’s ghost cities

A visit to any ‘Barrio Fiesta’ in any city where Philippine OFWs work abroad is dominated by condominium offerings
from developers like Megaworld, DMCI, Ayala Land, etc. The Philippines is one of the world’s largest remittance
recipients, with 10.5 million Philippine Overseas Foreign Workers (OFWs) living and working in 210 countries and
territories worldwide, 47% of them permanent migrants, 40% temporary, and the rest "irregular migrants". Among the
permanent overseas Filipinos, 65.2% live in the US, followed by Canada (13.1%), Europe (7.1%), Australia (6.8%), and
Japan (3.4%), according to the Commission on Filipinos Overseas (CFO). In 2018, total cash remittances reached a
record high of US$28.94 billion (or about 8.7% of GDP), up by 3.15% from a year earlier.

It is estimated that 60% of these remittances go directly or indirectly to the real estate sector, according to the World
Bank. These OFW remittances power the low-end to mid-range residential property market, housing projects and mid-
scale subdivisions in regions near Metro Manila, such as Cavite, Batangas, and Laguna Provinces.
 According to the Philippine Housing and Land Use Regulatory Board,
452,198 condominium units were built in Metro Manila from January
2001 to March 2014. The condominium stock increased further in recent
years, with an additional 67,699 units covered by licenses to sell in 2015,
99,524 units in 2016 and 104,196 units in 2017. In 2018, about 35,700
units were completed in Metro Manila, mainly coming from Quezon City
and Pasay City, according to Jones Lang LaSalle.

There are around 807,496 families or 27.5% of the NCR population who
have a dispensable income greater than PHP34,962 (US$672), which is
the required monthly income to be able to afford the monthly
amortization of PHP10,500 (US$202). PHP10,500 (US$200) is the minimum monthly amortization for a housing loan of
PHP2 million (US$38,037), with accommodating loan rates of 90% LTV, with an annual interest rate of 5.7%, and a loan
tenor of 30 years.

So for all these newly-built condominiums to be occupied by those who could afford to rent or buy (we calculate for
the buying case, but given current interest rates it may be more expensive to rent), the majority of locals who have the
financial capacity to occupy them would need to purchase or rent a unit, for the available supply of condominium units
to be taken up.
These are problematic numbers given that many of these families already have houses in the first place. The World
Bank assumes only 10% of these capable end-users as prospective end-users, indicating a gross oversupply.

In terms of affordability, property developers are building more mid-end condominium units than locally-based
Filipinos can afford to occupy. Many of the buyers are OFWs, causing a mismatch between demand and supply.

The average annual growth of remittances from 2009 to 2018 was only 5.8% , compared to 15.5% annually from 2002
to 2009. The World Bank believes the slowdown in remittances is due to:

 Stricter implementation of the migrant workers’ bill of rights;

 Political uncertainties in host countries; and

 The slowdown in the advanced economies.

"Affordable" housing shortage

The Philippines has a huge housing need at the low end. Nationwide, the country has a housing shortage of about 4
million units, according to the Subdivision and Housing Developers Association (SHDA). Most of this would need to be
socialized housing - units with a selling price of under PHP450,000 (US$8,548). In Metro Manila, as many as 300,000
households reside in informal and semi-uninhabitable housing units, composing 8.7% of Metro Manila’s total
population. These people live in appalling conditions. Many others live in very poor conditions.
To meet the needs of these families, the government embarked on the National Shelter Program to provide housing for
informal settlers and other families who do not have enough income to rent nor buy houses in the prevailing markets
rates.

Socialized housing units, or those which cost less than PHP450,000 (US$8,548) can be purchased with a monthly
amortization of PHP2,302 (US$44). The Pag-Ibig Fund, (which is the Filipino word for love), the country’s state-owned
and subsidized housing loan provider, provides a fixed rate of 4.5% for 30 years for socialized housing units.

The problem is that these low-end housing units are usually far from work.

Philippine peso remains weak, amidst a record trade deficit

The Philippine peso lost about 11% of its value against the U.S. dollar in the past three years, from an exchange rate of
PHP47.191 = US$1 in December 2015 to PHP52.871 = US$1 in December 2018. In fact, it was its weakest performance
in over 13 years, amidst a record trade deficit caused by a surge in imports.
 In 2018, the country posted a record high trade deficit of US$41.44
billion, up from US$27.38 billion in 2017 and US$26.7 billion in 2016, as
imports surged and exports dropped last year, according to the PSA.

The wider trade deficit resulted in a ballooning current account deficit as

more dollars were being spent for importation – putting more pressure
on the Philippine peso. In 2018, the country’s current account deficit
was estimated at US$6.4 billion – over twice larger than the previous
projection of US$3.1 billion. The current account deficit is expected to
increase further to US$8.4 billion in 2019.

Recently, Socioeconomic Planning Secretary Ernesto Pernia expressed concern over the country’s widening current
account shortfall.

“A widening current account balance due to rising capital goods imports and anemic exports growth is a cause for
concern,” said Pernia. “The widening gap emphasizes the need to reform legislation to allow foreign investments in
firms catering to the domestic market, in addition to expanding their exporting activities.”
 In February 2019, the country’s inflation rate was 3.8%, down from 4.4%
in January 2019 and 5.1% in December 2018 and within the
government’s target range of 2% to 4%, mainly due to slower price
increases of food and non-alcoholic beverages. Nationwide inflation
stood at 5.2% in 2018 – the highest in a decade – as a result of oil price
hikes and the impact of the Tax Reform for Acceleration and Inclusion
(TRAIN) law signed last December 19, 2017.

Uninterrupted economic growth

In 2018, the Philippine economy expanded by about 6.2%, according to the Philippine Statistics Authority (PSA). It was
lower than the average annual growth rate of 6.6% from 2012 to 2017 but still places the country as among the fastest
growing economies in Emerging Asia. During Q4 2018, industry had the fastest growth, with 6.9%, followed by services
(6.3%) and agriculture (1.7%).

The total number of foreign tourist arrivals rose by 7.7% to 7.1 million people in 2018 from a year earlier, according to
the Department of Trade and Industry (DTI). South Korea remained the country’s top tourism market with 22.3% share,
followed by China (17.6%), the US (14.5%), Japan (8.9%) and Australia (3.9%).
 The economy is expected to grow at a faster pace of 6.7% this year,
amidst improving macroeconomic conditions and slowing inflation,
according to ADB President Takehiko Nakao.

In 2018, the nationwide unemployment rate stood at 5.3%, down from

5.7% in 2017, 5.5% in 2016, 6.3% in 2015, 6.6% in 2014 and 7.1% in
2013, according to the PSA. Unemployment is expected at 5.5% this year,
from an annual average of 6.6% from 2008 to 2018, according to the
IMF.

The Philippine economy grew by an average of 6.3% annually from 2010

to 2016, thanks to the previous administration’s socioeconomic reforms. Former president Benigno (Noynoy) Aquino III
(president June 2010 - June 2016) instituted a no-holds barred anti-corruption campaign which wowed foreign
investors and caused consumer confidence to surge. The Philippines’ investment ratings were upgraded to investment
grade by Moody, Standard & Poors’, and Fitch Ratings. The Philippines’ competitiveness improved sharply, with a
Global Competitiveness Index rank of 47th out of 140 economies in 2015-16, up from 52 in 2014, 59 in 2013, and 65 in
2012.

However, the country’s competitiveness rank slipped back to 57th in 2016-17 and to 56th in both the 2017-18 and
2018-19 ranking.

During the May 2016 presidential election, former Davao City mayor Rodrigo Duterte won a landslide victory,
capitalizing on discontent with rising inequality and on the perceived incompetence of Aquino’s chosen successor, Mar
Roxas. Duterte vowed to bring progress to all Filipinos, to eliminate government corruption and to substantially reduce
crimes, especially the use of illegal drugs. While the government’s "war on drugs" is now very controversial having
resulted in the death of over 7,000 Filipinos, Duterte’s net trust rating remains either “excellent” or “very good”, based
on the Social Weather Stations (SWS) surveys.

Duterte’s push for a charter change to shift to a federal system of government from the current unitary system was
also very controversial.

Duterte’s "Build, Build, Build" infrastructure program

President Duterte’s ambitious US$180-billion "Build, Build, Build" program is designed to modernize the country’s
infrastructure by rolling out 75 flagship projects, including 6 airports, 9 railways, 3 bus rapid transits, 32 roads and
bridges, 4 seaports, 4 energy facilities, 10 water resource projects and irrigation systems, and 5 flood control facilities,
among others.

Nine of these projects are currently under construction, including the Clark Airport expansion; the first phase of the
Metro Manila subway; the North-South railway projects; the 130-km first phase of the Mindanao railway; the Kaliwa
water supply project; and the Cavite flood control project, among others.

Some 28 projects are projected to be completed before the end of Duterte’s term in 2022. These projects are expected
to sustain strong economic growth, raising annual infrastructure spending by about 3% to 7% of GDP until 2022.
"We will make the next few years the golden age of infrastructure in the Philippines to enhance our mobility and
connectivity, and thereby spur development growth," said Duterte. "In other words, we are going to build, build and
build."

Unsurprisingly, the Philippine government breached its budget deficit cap last year, as expenditures exceeded target
and outpaced the increase in revenues. In 2018, fiscal deficit reached PHP558.3 billion (US$10.6 billion), up 59% from
the PHP350.6 billion (US$6.66 billion) gap recorded in 2017, according to the Bureau of the Treasury. As percent of
GDP, the deficit was equivalent to 3.2% of GDP in 2018 – overshooting the 3% target for the year.

Revenue generation increased 15% y-o-y to PHP2.85 trillion (US$54.13 billion) in 2018, thanks to the implementation of
the Tax Reform for Acceleration and Inclusion (TRAIN) law, which was projected to add PHP63.3 billion (US$1.2 billion)
to state coffers in its first year. On the other hand, government spending surged 21% y-o-y to PHP3.4 trillion (US$64.58
billion) in 2018, amidst heightened social protection and infrastructure spending, particularly massive projects under its
“Build, Build, Build” program.

For 2019, the government has set a wider deficit ceiling at PHP624.2 billion (US$11.86 billion).