1. Philippine Economy

3. The Philippines is an archipelago of 7,107 islands. Before the Spanish explorers came, Indo-Malays and Chinese merchants had settled here. In 1521 the Spaniards, discovered the islands. On June 12, 1898, Emilio Aguinaldo declared the Philippines independent from Spain and proclaimed himself president. After ruling for 333 years, the Spaniards finally left in 1898 and were replaced by the Americans who stayed for 48 years.

4. On July 4, 1946, the Americans recognized Philippine independence. The Philippines is the third largest English-speaking country in the world. The country is divided into three geographical areas. It has 14 regions, 73 provinces and 60 cities.

5. Capital: Manila Ethnic Make-up: Christian Malay 91.5%, Muslim Malay 4%, Chinese 1.5%, other 3% Religions: Roman Catholic 83%, Protestant 9%, Muslim 5%, Buddhist and other 3% Languages Filipino is the official language of the Philippines. In spite of being the national language, only about 55 percent of Filipinos speak the language. In addition to Filipino are about 111 distinct indigenous languages and dialects, of which only about 10 are important regionally.

6. English is generally used for educational, governmental and commercial purposes and is widely understood since it is the medium of instruction in schools. The Philippines are the third largest group of English speaking people in the world, after the United States and the United Kingdom. Since English is widely spoken in the Philippines, it is common to hear Filipinos use a mixture English and Filipino. A steadily dwindling minority still speak Spanish, which had at one time been an official language.

9. Has Philippines been able to catch up with rest of South East ?

10. It was once expected that the Philippines would be the economic powerhouse of Asia, but instead it became one of its poorest countries. After years of corruption and neglect, there are, however, some tentative signs of improvement in the Philippine economy. After the Second World War, Philippines was believed to become the economic powerhouse of Asia, not Japan.

11. It was an American ally, it was a stable Philippino-speaking country with a capable workforce, and it had natural resources. By the 1960s it had a per capita income that was double that of Thailand, however the opposite has happened, and Thailand has almost twice the per capita income of the Philippines.

12. Several hundred years of Spanish rule followed by almost 50 years of US occupation created enormous landed estates that are controlled by a small group of families. Agriculture employs 40% of the populace, often on these estates, and produces 20% of GDP. Reform and economic liberalization are vital for the long term economy, but with the landed families wielding so much economic and political power major change is unlikely.

13. The Philippines also suffered an economic recession in 1984 and 1985, reducing economic conditions by as much as 10%. Turbulence in the political area during this time also had a negative impact on the economy of the Philippines. Lacking opportunities at home, Filipinos have sought work elsewhere. Remittances from overseas Filipino workers (OFWs) are estimated to contribute close to 10% of GDP.

14. In the US alone there are over four million Filipinos, with a further two million in Saudi Arabia. One million Filipinos are sent out each year through the overseas employment program. In 2007 the International Monetary Fund recognized the Philippines as being the 37th largest economy in the world. Its growth rate in 2007 was 7.3%, the best the country has had thirty years.

15. Agriculture Products include rice, coconut products, sugar, corn, pork, bananas, pineapple products, aquaculture, mangoes, and eggs. Agriculture here suffers from low productivity, low economies-of-scale, and inadequate infrastructure support. Industrial production is centered on processing and assembly operations of the following items like food, beverages, tobacco, rubber products, textiles, clothing and footwear, paints, plywood and veneer, paper and paper products. Heavy industries are dominated by production of cement, glass, industrial chemicals, Fertilisers, iron and steel and refined petroleum products.

16. The Philippines relies heavily on electronics shipments for about two-thirds of export revenues. Although there has been some improvement, over the years, local value added of electronics exports remains relatively low at about 30%. Intel has been in the Philippines for 28 years as major producer of Intel's advanced products including the Pentium IV processor

17. Outsourcing industry is very huge in Philippines. In Mining it is well endowed with mineral and thermal energy resources. Philippines mineral exports amounted to $650 million. Philippines is a world leader in renewable energy sources. It has considerable hydroelectric generation facilities, and has created the world’s first commercial scale geothermal energy installation. Around a quarter of the Philippine energy is generated from underground heat sources.

18. Philippines economic development has been very fast in recent years. However, in last three decades, growth rate has been fastest. Real gross domestic product for this time was estimated to be 7 percent, but growth has slowed down a bit in 2008, which came to about 4.5% because of world financial crisis. Economic development in Philippines economy has been because of high government spending. A hard working service sector and large allowance from millions of Filipinos working abroad played an important role in Philippines economic development.

19. There has been an increase in expenditure in infrastructure of country. Economic prospects of Philippines have grown, which in turn would augur well for economic development at Philippines. Per capita GDP as was recorded in 2008 was $3,400 and 4.5% is real growth rate in gross domestic product. Agricultural sector contributes about 13.8% to GDP, 2008 of Philippines economy and 31.9% is received from industry. From service sector of Philippines economy contribution towards Philippines GDP is about 54.3%.

20. 2009 fiscal is expected to bring not much of turbulence as far as economic conditions in Philippines are concerned. It is expected that there would be an increase of 4.1 percent in gross domestic product for 2009 fiscal. In first quarter of 2009 rate of growth of Philippines GDP was 3.5 percent. Philippines government had previously estimated this rate to be within 3.7 to 4.4 percent.

21. Growth rate of GDP had gone down to 4.6 percent from 7.2 percent in 2007 fiscal. It is being expected that rate of inflation would go down to 6.4 percent in February 2009. It further depreciated to less than 4 percent as of April 2009. It is also expected that in first quarter of 2009 fiscal exchange rate between United States dollar and Philippines Peso was on its downward slope. In first quarter of 2009 fiscal 1 US dollar was worth 48.50 Philippines Peso.

22. Philippines exports and imports In 2008 total Philippines goods worth around $12 billion were exported to different countries. Total export of services amounted to about $2 billion for Philippines by 3rd quarter 2008. Philippines exports were boosted by growth in export of prepared tuna, petroleum naptha, and desiccated coconut. Philippines imported goods worth about $17 billion by third quarter of 2008. Total import of services increased from $2.4 billion in 2007 to more than $2.5 billion. Major products to be imported were cereals, cereal products, base metal, chemical elements and compounds and transport equipments.

23. Philippines inflation From a high inflation rate of 6.2 percent in 2007, inflation in Philippines fell to an average of 2.8 percent in 2008. It is expected that in 2009, inflation would hover between 2.5 percent to 3.5 percent.

24. Strong fiscal adjustment and a favourable global environment had benefited the Philippine economy Growth in 2006 was driven by double-digit export growth and private consumption. There was a 6.3 percent growth in the service sector, boosted in particular by the financial sector and private services such as business process outsourcing. Agricultural output rebounded by 4.1 percent growth. Manufacturing output continued to grow on pace with GDP.

25. Boosted by foreign capital inflow, the Philippine stock market was among the top East Asian performers. Corporate profitability had increased indicating that intentions to expand investment may be in process. FDI has grown significantly from a small base, to a growing share of overall private investment. Private services, particularly voice-based BPO sectors such as call centers, grew rapidly. Overall, services account for more than 50 percent of GDP.

26. Reasons for slow growth Poor infrastructure due to decades of fiscal constraint and ineffective delivery caused in part by governance shortfalls, and the high cost of certain inputs, such as electricity. The concentrated ownership structure of corporate conglomerates created barriers to investment. Many corporate were comfortable investing only a portion of their funds in-country, and invested considerable portions offshore. The combination of entry barriers and underinvestment by incumbents were the contributing factors for low investment.

27. While the economy remains relatively resilient, the GDP growth is expected to be 1.9 percent for 2009 and gradually recover in 2010. Labor market conditions are expected to deteriorate significantly in 2009 and through 2010. Remittance flows have sharply decelerated and are projected to post a moderate decline in dollar terms for 2009.

28. Thank you