:: Factsheet Philippines (pdf) ::
THE PHILIPPINE ECONOMY
The Philippines has achieved unprecedented economic growth over the past years. Average gross domestic product (GDP) growth improved to 5.5% during 2004–2008, versus about 3% during 1990–2000. Strong growth was accompanied by benign inflation, declining national government debt as a proportion of GDP, reduced fiscal deficit, and a more robust balance of payments position.
Despite substantial progress, challenges remain and further reforms are needed to sustain economic gains and strengthen the economy’s resilience. Investments and job creation still remain inadequate. In 2008 and 2009, exogenous pressures stemming from steep commodity prices, the global economic slowdown and financial crisis in advanced economies slowed growth and made the task of reducing poverty more difficult.
GDP growth slowed to 0.9% in 2009 due to a meltdown in exports and investments, while the fiscal deficit rose to 3.9% of GDP as the Philippine government increased public spending to support the economy amid the global downturn. Continued stability in the domestic finance sector and strength in the external payments position helped the economy remain steady. The economy recovered in 2010, posting a relatively high growth rate of 7.3%, a significant balance of payments surplus and relatively stable inflation. The economy was heavily supported by overseas remittances, continued steady growth in the business process outsourcing industry and a strong recovery in electronic exports. Despite the strong recovery percentage-wise percent-wise the Philippines still could not keep pace with its neighbours in terms of foreign direct investment.
Other important industries in the Philippines include food processing; textiles and garments; and automotive parts. The mining industry is well established and has significant growth potential due to large reserves of chromate, nickel, and copper. Significant offshore hydrocarbon finds have added to the country's substantial geothermal, hydro, and coal energy reserves.
The services sector contributes more than half of the overall Philippine economic output, followed by industry (about 30%), and agriculture (less than 20%). Most industries are concentrated in areas around metropolitan Manila and Cebu. Some of the major corporations that hold prominent positions include San Miguel Corporation, Philippine Long Distance Telecommunications Company, SM Investments, Ayala Corporation and Aboitiz Equity Ventures Inc.
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POLITICAL HISTORY
The Philippine Islands became a Spanish colony during the 16th century. They were ceded to the US in 1898 following the Spanish-American War. In 1935 the Philippines became a self-governing commonwealth. Manuel Quezon was elected president and was tasked with preparing the country for independence after a 10-year transition. During World War II the islands fell under Japanese occupation and U.S. forces and Filipinos fought together during 1944-45 to regain control. On 4 July 1946 the Republic of the Philippines attained its independence. A 20-year rule by Ferdinand Marcos ended in 1986, when a "people power" movement in Manila ("EDSA 1") forced him into exile and installed Corazon Aquino as president. Her presidency was hampered by several coup attempts that prevented a return to full political stability and economic development. Fidel Ramos was elected president in 1992. His administration was marked by increased stability and by progress on economic reforms. Joseph Estrada was elected president in 1998. He was succeeded by his vice-president, Gloria Macapagal-Arroyo, in January 2001 after Estrada’s stormy impeachment trial on corruption charges broke down and another "people power" movement ("EDSA 2") demanded his resignation. Macapagal-Arroyo was elected to a six-year term as president in May 2004. In the election held on 10 May 2010 Benigno Aquino III (son of Ninoy and Corazon Aquino) was declared the winner and took office on 30 June 2010. He campaigned against corruption and on a platform of change which included job creation, provision of health care and education, and other domestic issues. The President does not have a majority in Congress and is dependent on alliances and mutual agreement in order to pass legislation.
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ECONOMIC HISTORY
Since the end of World War II, the Philippines has been on an unfortunate economic trajectory, going from one of the richest countries in Asia (following Japan) to one of the poorest. Growth after the war was rapid, but slowed as years of economic mismanagement and political volatility during the Marcos regime contributed to economic stagnation and resulted in macroeconomic instability. A severe recession from 1984 through 1985 saw the economy shrink by more than 10%, and political instability during the Corazon Aquino administration further dampened economic activity.
During the 1990s, the Philippine government introduced a broad range of economic reforms designed to spur business growth and foreign investment. As a result, the Philippines saw a period of higher growth, although the Asian financial crisis in 1997 slowed Philippine economic development once again.
Despite occasional challenges to her presidency and resistance to pro-liberalisation reforms by vested interests, President Macapagal-Arroyo made considerable progress in restoring macroeconomic stability and economic growth. Amid the global economic slowdown in 2008, economic growth stagnated once again in 2009. A strong economic recovery in 2010 returned the Philippines back to the growth path experienced before the financial crisis.