Philippines (the) flag Philippines (the): Economic and Political Overview

The economic context of the Philippines

Economic Indicators

The Philippines' economy is considered as one of the most dynamic in East Asia and the Pacific. Following a robust rebound from the pandemic in 2022, economic expansion slowed in the first half of 2023 owing to external challenges, fiscal underutilization, and the normalization of accumulated demand. However, after bouncing back in the second half of the year, total GDP growth was estimated at 5.3% by the IMF. This year, growth is projected to attain 5.9%, buoyed by an uptick in public investment and enhanced external demand for Philippine exports. The resurgence in private investment is expected to be gradual, given the need to deplete excess real estate inventory. The government's infrastructure initiatives, along with increased FDI opportunities and private sector involvement through Public-Private Partnership models, will gradually attract private investment and unlock a growth potential ranging from 6% to 6.5% over the medium term (IMF).

Concerning public finances, the budget deficit stood at 4.8% of GDP in 2023, down from 5.6% one year earlier. The 2024 budget proposal, ratified by the House of Representatives in September, targets a deficit of 5.1% of GDP. This consolidation primarily hinges on increased tax revenues and prudent management of current expenditures. The national government debt increased marginally from 57.5% of GDP at the end-2022 to 57.6% in 2023 and is projected to remain stable over the forecast horizon, driven mainly by a favourable interest-growth differential. Debt coverage at the national level is considered appropriate by the IMF, as local government units and social security institutions have surpluses. Inflation decelerated from its peak in early 2023, aided by domestic policy tightening, although there has been a recent uptick attributed to resurgent commodity prices, averaging 5.8%. Inflation is expected to converge to the target band in 2024 (3.2%) and 2025 (3%).

In 2023, the unemployment rate (4.7%) and underemployment rate remained close to their historical lows, with the labour force participation rate moving above its pre-pandemic levels although broader measures incorporating the informal labour market suggest some slack remains. The country’s GDP per capita (PPP) was estimated at USD 10,133 in 2023 by the World Bank but 22% of the population still lives below the poverty line (PSA, 2023). According to a 2022 report by the World Bank, the Philippines ranked 15th out of 63 countries in terms of income inequality. The top 1% of income earners accounted for 17% of the national income, while the bottom 50% only garnered 14%.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 404.28436.62471.52509.38551.56
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 3,6243,8684,1304,4154,730
General Government Balance (in % of GDP) -5.6-5.2-4.2-3.6-2.9
General Government Gross Debt (in % of GDP) 57.456.656.956.755.7
Inflation Rate (%)
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) -18.26-11.21-10.16-8.29-7.19
Current Account (in % of GDP) -4.5-2.6-2.2-1.6-1.3

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

According to the latest data by the World Bank, the agricultural sector contributes to 9.5% of the Philippines’ GDP and employs around 24% of the labour force. Rice is the primary staple crop, with corn, coconut (the second-largest producer worldwide), sugarcane, bananas, and mangoes as significant contributors to the agricultural output. The country's fertile land and favourable climate conditions allow for the cultivation of a wide variety of fruits and vegetables, including pineapples, papayas, and vegetables such as eggplant and tomatoes. Livestock farming, including poultry, swine, and cattle, is also prominent, catering to domestic consumption and export markets. Despite the agricultural potential, challenges such as land reform issues, inadequate infrastructure, natural disasters, and climate change impacts persist, affecting productivity and sustainability in the sector. According to data from PSA, the full-year value of production in agriculture and fisheries at constant 2018 prices expanded by 0.4% in 2023, marking the first time agricultural output posted growth after three straight years of decline.

The industry sector contributes to 29.2% of GDP and employs 19% of the workforce. Industrial food processing is one of the Philippines' main manufacturing activities. The big industries are dominated by the production of cement, glass, chemicals products and fertilisers, iron, steel and refined oil products. While the sector's growth was halted in the initial stages of the pandemic, as response measures impeded manufacturing activity and reduced the global demand for industrial products, the Filipino industry showed a gradual recovery in the past few years. The logistics industry was particularly dynamic, driven by a recovery in both local and global demand in e-commerce, domestic manufacturing and the export sectors. In 2023, the annual average growth rate of the value of production index for manufacturing exhibited an expansion of 5.9%, while in terms of volumes, production increased by 4.4% (data PSA).

The tertiary sector - which represents 61% of GDP and employs 58% of the country’s workforce - has developed substantially, particularly in telecommunications, call centres and finance, business process outsourcing (BPO) and information technology services, with cities like Manila and Cebu emerging as global BPO hubs. Additionally, the tourism industry plays a significant role (5.45 million international visitors in 2023, still 44% below the pre-COVID level). The retail and wholesale trade sector is also prominent, reflecting the country's robust consumer market. Emerging sectors include fintech, e-commerce, and healthcare services, driven by technological advancements and evolving consumer preferences. With a young and tech-savvy population, the Philippines is poised to continue expanding its tertiary sector and diversifying its service offerings in the global market.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 24.3 18.7 57.0
Value Added (in % of GDP) 9.5 29.2 61.2
Value Added (Annual % Change) 0.5 6.5 9.2

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.


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Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024


Country Risk

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Latest Update: July 2024