According to 2017 data from the International Monetary Fund (IMF), the Philippines is the world’s 34th-largest economy based on nominal gross domestic product (GDP), which evaluates market prices, and 29th-largest economy based on purchasing power parity (PPP), which compares the prices of like consumer goods among countries.
The country is characterized as newly industrialized, which means that its economy is transitioning from agriculture to services and manufacturing. With a population of around 100 million, the Philippines is ranked 126th in the world based on nominal GDP per capita and 120th based on GDP by PPP per capita as of 2017. These measures divide nominal GDP and GDP by PPP by the country’s population.
What should I know about nominal GDP and PPP?Among the multiple ways that economists measure a country’s economic strength, nominal GDP and PPP are two of the most common.
Nominal GDP is based on official government estimates and depends on exchange rates between two countries, typically using the US dollar for one of the denominations. It’s useful for measuring financial flows between countries. But because it doesn’t consider differences in cost of living, it can distort per capita income estimates.
PPP, on the other hand, considers the relative cost of local goods, services and inflation rates — all factors considered to reflect a country’s domestic market. Because PPP compares the costs of a common “basket of goods” — some 3,000 consumer goods that include food, fuel and insurance — it’s considered a more ideal way to project per capita income projections and gauge poverty thresholds.
The Philippines’ official currency is the Philippine peso (PHP). This currency has recently fluctuated between 49 and 52 PHP against the US dollar.
The agricultural sector accounted for 11% of GDP and employed 30% of the workforce in 2014. The Philippines is one of the world’s largest producers of coconuts and pineapples. It’s one of the world’s largest importers of rice and a major sugar producer.
The country’s burgeoning industrial sector includes shipbuilding and repair, automobile and automobile parts manufacturing, airplane parts manufacturing and electronics manufacturing.
Gold, nickel, copper and chromite deposits in the Philippines are among the world’s largest, and the country is also rich in geothermal energy resources and natural gas reserves.
The services sector has enjoyed tremendous growth, mainly due to the rise of business process outsourcing (BPO) — the contracting of business operations to third-party service providers. With many of the top US BPO companies operating in the Philippines, the country is one of the world’s leading BPO service providers.
The Philippines has also benefited from remittances transferred by Filipinos abroad to families back home. Filipino Americans accounted for 43% — or around $10.6 billion— of all remittances in 2012.
The country comprises around 43 million Filipino workers. As of October 2017, unemployment is pegged at 5%.
Major contributors to the economy
The Philippines is a member of the World Trade Organization and several other trading groups. Japan, the US and China are among its top trading partners.
The country’s top exports include:
- Electrical machinery and equipment
- Computers and machinery
- Optical, technical and medical apparatus
Its major imports include:
- Electrical machinery and equipment
- Machinery, including computers
- Mineral fuels, including oil
- Plastics and plastic articles
The Philippines remains one of the most dynamic economies in East Asia and the Pacific.
The country’s GDP growth is projected to be 6.36% annually from 2010 to 2019, up from 4.46% between 2000 and 2009. In the first half of 2017, the Philippines had one of the fastest-growing economies among Southeast Asian countries that include Indonesia, Thailand, Malaysia and Vietnam. Although the economy is forecast to grow more slowly in the next two years, an ambitious public infrastructure program might lead to higher-than-expected growth rates.
Strong economic fundamentals and a competitive workforce have led to higher wage incomes, helping to reduce poverty incidence to 21.6% in 2015 from 25.2% in 2012. As a result of recent economic gains, the country can likely sustain this poverty reduction.