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The Philippines’ economy is considered one of the most dynamic economies in the East Asia Pacific region. Solid economic fundamentals and a competitive workforce drive the growth momentum of its economy. The country’s average annual gross domestic product (GDP) growth accelerated to 6.4% between 2010 to 2019.
However, the Philippine GDP contracted by a record 9.6% in 2020, as the country imposed prolonged lockdowns to contain the Covid-19 spread. Stringent quarantine measures led to significant decreases in consumption and investment growth. It further caused a dramatic slowdown in exports, tourism, and remittances.
However, in 2021 the Philippine economy expanded by 5.7% and returned to its pre-pandemic levels and even climbed to 7.6% growth in 2022.
The economy grew by 5.6% last year, and the IMF predicts 6.2% for 2024 and 2025.
Philippine GDP Annual Growth Rate (in %)
The Philippines’ population is currently about 114.161 million, with a median age of 25.0 years.
Unemployment rates in the Philippines declined last year, reaching 3.1% in December 2023. More recently, numbers are on the rise again.
Philippine Unemployment Rate (in %)
Currency and Central Bank
The Philippine peso (PHP), also referred to as piso in Filipino is the country’s official currency. It is subdivided into 100 centavos or sentimos. Prior to the adoption of the Filipino language on banknotes and coins in 1967, the English word peso appeared on Philippine money.
The Bangko Sentral ng Pilipinas (BSP), serves as the country’s central bank. The BSP was established in 1993 in accordance with Republic Act 7653 or the New Central Bank Act of 1993. This was later amended under Republic Act 11211 or the New Central Bank Act of 2019.
Inflation in the Philippines slowed to its weakest in nearly two years in January 2024 (2.8%). The 2023 average inflation rate stood at 6.0%, way outside the central bank’s 2%-4% target.
Philippine Inflation (in %)
Industry and Trade
Services, industry, and agriculture are the main sectors of the Philippine economy. Food processing, cement, iron, and steel production, and telecommunications are among the country’s most significant contributors.
The services sector makes an enormous contribution to the country’s GDP at around 61% and provides about 58% of the nation’s labour force. Over the past years, the sector has expanded tremendously, particularly in telecommunications, business process outsourcing (BPO), and finance.
The BPO boom in the Philippines is attributed to several outsourcing advantages that companies enjoy, such as high spoken English proficiency, a highly educated labour force, and lower operational and labour costs.
The Philippines’ industry sector is second in GDP contribution with about 29% and employs 18% of the total workforce. Among the country’s major manufacturing activities are industrial food processing, cement, glass, chemicals production, and iron and steel manufacturing.
Lastly, the agricultural sector’s contribution to the GDP has continued to decline in recent years and is currently at 9.5%. However, it still provides employment for almost 24% of the labour force. Coconut, sugar, and rice are among the top agricultural products of the Philippines.
The country is currently ranked 44th globally in terms of total exports, with integrated circuits, office machine parts, insulated wire, semiconductor devices, and electrical transformers as its main export products. Its top export partners are China, the US, Japan, Hong Kong, and Singapore.
Philippine economy Balance of Trade
Meanwhile, the Philippines is 33rd in total imports and its top import products are integrated circuits, refined petroleum, cars, crude petroleum, and broadcasting equipment. China, Japan, South Korea, the US, and Singapore are its main import partners.
Stock Exchanges and Capital Markets
The Philippine Stock Exchange or PSE is the country’s sole stock exchange. It was formed following the merger between the Manila Stock Exchange and the Makati Stock Exchange in 1992. PSE has been operating since 1927, making it one of the oldest stock exchanges in Asia.
The PSE Composite Index or PSEi is the main index of the Philippines. It comprises 30 of the largest and most active stocks listed on the exchange. These companies were chosen based on a set of public float, liquidity, and market capitalisation criteria.
The PSE has a total market capitalisation of $301.686 bn in April 2024. Exchange-Traded Funds (ETFs) are offered via the First Metro Philippine Equity Exchange Traded Fund, Inc.
Bond Market
The Philippine domestic bond market is constituted of short- and long-term bonds issued mainly by the national government. Treasury notes and bonds dominate the market. Although the Philippine corporate bond market is still small compared to government bonds, it has grown rapidly over the years.
In 2023, the country returned to the international capital markets with the issuance of its $3 bn worth of 5.5-year, 10.5-year, and 25-year US dollar-denominated global bonds.
The same year, the Philippines expanded its bond avenues to serve the Middle Eastern and Islamic instrument investors by issuing maiden Sukuk bonds.
Real Estate Market
The Philippine real estate market has grown significantly between 2010 to 2018 as a result of the economic growth and expansion of the middle class. However, following a slowing economy, the US- China trade war and the Covid-19 pandemic, the market slowed in 2019 and 2020.
The market ended the year 2020 being one of the worst-performing real estate markets in the Global Residential Real Estate market report 2020.
The recovery started in 2022. Last year, the average price of a luxury 3-bedroom condominium unit in Metro Manila’s central business districts rose by 3.98% to PHP 203,550 (US$3,571) per square meter, as per data from Colliers International.
As per the real estate investment firm, the market is projected to remain stable in 2024. However, house price growth might decelerate amidst slowing property demand.
Philippine Housing Index (in %)
Source of charts: tradingeconomics.com
