ALL ABOUT THE

ECONOMIC
PROBLEMS OF THE
PHILIPPINES
 Though a fast-growing economy, Philippines still needs to address the
issues of poverty, unemployment, and poor infrastructure. Here is some
information on the economic problems of the Philippines:
Did You Know?

 In January 2015, out of the 62.87 million Filipinos in the age group of 15 years and above, the
labor force comprised 40.11 million. Out of these, 2.65 million were unemployed.
Located in Southeast Asia, the Republic of the Philippines comprises 7,107 islands. With more
than 100 million people currently living in the Philippines, it is ranked as the 12th most populous
country in the world. Philippines' economy largely depends on the remittances from the Filipinos
residing overseas and investing in the homeland. More than 10 million Filipinos are currently
living abroad.
Philippines has emerged as one of the fastest growing economies in Asia, with an annual GDP
growth rate of 6.1% in 2014. According to the Asian Development Bank, the GDP growth,
Inflation, and Current Account Balance (share of GDP) in 2015 is estimated to be 6.4%, 2.8%,
and 4%, respectively. While these figures might paint a rosy picture, there are certain serious
issues that need to be addressed.
Economics Problems of the Philippines
Like most other southeast Asian regions, Philippines too has a history of European colonization. It
was a colony of Spain and the USA. The country is now home to multiple cultures and ethnic groups.
It is also looked upon as a perfect example of a 'mixed economy'. Traditionally, the economy
stabilized on the agrarian contributions and the manufacture of garments, pharmaceutical products,
and semiconductors. In the last decade, electronic exports added to the exports, along with various
products obtained by mining. Though Philippines too suffered in terms of exports, remittances from
overseas Filipino workers, and foreign direct investments, during the 2008 global economic crisis,
there has been steady economic growth in the recent years. However, there are certain economic
problems that cannot be ignored. The following sections list out some of the economic problems of
the Philippines.
Unemployment
In 2012, 10 million Filipinos were either unemployed (three million) or underemployed (seven
million). In October 2013, unemployment rate was 6.5% in comparison to 6.8% in 2012. According
to the Labor Force Survey, the unemployment rate was 6% and 6.6% in October 2014 and January
2015, respectively.

Only one-fourth of the Filipinos that enter the labor force are able to find good jobs in the country,
and the rest of them find jobs overseas, leave the labor force, or end up becoming
unemployed/underemployed. Thus, three-fourth of the workers are unemployed or informally
employed, with lack of opportunities to find good jobs. Though jobs are being generated, there's a
need to generate jobs at a much faster rate, to be able to bring down the unemployment rate. Many
of the unemployed individuals are college graduates. Many wait for job opportunities abroad, and
many families depend on remittances from family members who are staying abroad.
Poverty
Despite the talk about economic growth, the poverty rates have not changed significantly since
2006. As per the National Statistical Coordination Board (NSCB), poverty incidence of the
population improved from 26.3 percent in 2009 to 25.2 percent in 2012.

Even though Philippines is a fast-growing economy, there's been just a minor decline in the
incidence of poverty. Poverty is very much linked to unemployment. Unfortunately, the growth is
restricted to the BPO, retail, and real estate sector, and a large number of Filipinos remain without
jobs. On top of that, natural calamities further push people below the poverty line. Thus, economic
disparity is a common feature. In general, the gains from higher economic growth have not really
trickled down to the poor.
Poor Infrastructure
Infrastructure is one of the biggest challenges. In the Global Competitiveness Report 2014-2015 of
the World Economic Forum, Philippines didn't fare well in terms of the quality of the overall
infrastructure. It ranked at number 91 among 144 countries. This can be attributed to
underinvestment in infrastructure.

In order to host global companies, Philippines will have to pay more attention to enhancing the
infrastructure. A well-developed transportation (roads, railroads, ports, and air transport) and
communication system is extremely essential for economic activities. As per the World Bank's Ease
of Doing Business 2015 report, Philippines ranked 95 out of 189 economies. It needs to improve its
ranking in certain categories. It ranked 161 in the category of starting a business, 124 in dealing
with construction permits, 108 in registering property, 104 in getting credit, 154 in protecting minority
investors, 127 in paying taxes, and 124 in enforcing contracts. Thus, the policy makers should take
steps to attract global companies or investors.
Heavy Dependence on Remittances
Philippines was the third-highest recipient of migrant remittances in 2013, after India and China.
According to the Philippine Central Bank, remittances from overseas Filipino workers (OFWs)
reached USD 25.1 billion in 2013. It was 7.6% higher than the remittances from the last year, and
accounted for 8.4 % of Philippine gross domestic product (GDP) in 2013.
The source countries for the remittances included the United States, Saudi Arabia, the United
Kingdom, the United Arab Emirates, Singapore, Canada, and Japan. The country heavily relies on
these funds. Their economic growth can primarily be associated to the remittances from the
overseas Filipino workers, as well as the growth in the Business Process Outsourcing (BPO) sector.
Also, one cannot rule out that the growth is connected to the global economy. In the event of any
crisis, economic growth is bound to suffer. Thus, greater attention has to be paid to addressing to
the internal problems of the economy and enhancing domestic-oriented growth. A policy of removing
structural impediments to growth has to be adopted, with lesser focus on foreign investors and
exporters.
Besides the aforementioned issues, corruption is another aspect that needs to be taken care of. The
current administration needs to prepare an industrialization program that encourages value-addition
manufacturing or services and builds Filipino-owned industries. Being overly dependent on global
economy or remittances from Filipinos living abroad will make the nation vulnerable to external
shocks. Thus, the aim should be to encourage inclusive growth in the country by creating
employment opportunities and reducing poverty.
BASIC ECONOMIC
PROBLEMS
INCLUDE 1:1
 =PRODUCTION=
Is a process of combining various
material inputs and immaterial inputs
(plans, know-how) in order to make
something for consumption (the output).
It is the act of creating output, a good
service which has value and contributes to
the utility of individuals.
Types of production:

 Primary production
 Is carried out by ‘extractive’ industries like
agriculture, forestry, mining and oil extraction. These
industries are engaged in such activities as
extracting the gifts of Nature from beneath the
earth’s surface and from the oceans.
 Secondary production
 This includes production in manufacturing
industry, viz., turning out semi-finished and finished
goods from raw materials and intermediate goods –
conversion of flour into bread or iron ore into finished
steel. They are generally described as
manufacturing and construction industries, such as
the manufacture of cars, furnishing, clothing and
chemicals, as also engineering and building.
 Tertiary production
 Industries in the tertiary sector produce all those
services which enable the finished goods to be put in
the hands of consumers. In fact, these services are
supplied to the firms in all types of industry and
directly to consumers.
Examples cover:
distributive traders banking
insurance transport and communications

This also includes government services such as:

law administration
Education health and defence
 =DISTRIBUTION=
In economics the systematic attempt to
account for the sharing of the national
income among the owners of the factors of
production – land, labour, and capital.
Traditionally, economists have studied how
the costs of these factors and the size of
their return – rent, wages, and profits – are
fixed.
 =CONSUMPTION=
Consumption, in economics, the use of
good and services by households. It is one
of the bigger concepts in economics and is
extremely important because it helps
determine the growth and success of the
economy.
 =Economic Growth=
Economic growth is an increase in the
capacity of an economy to produce goods
and services, compared from one period of
time to another. It can be measured in
nominal or real terms, the latter of which
is adjusted for infation. Traditionally,
aggregate economic growth is measured
in terms of gross national product (GNP)
or gross domestic product (GDP).
THE END