The Philippines is one of the fastest-growing economies in East Asia Pacific region with

real gross domestic product (GDP) growth on average of 6.4% from 2010 to 2019. Despite

external headwinds, and a series of natural calamities, the country has consistently grown. With

the continuous increase in urbanization, growing middle class and a large amount of youth in the

population, enhanced the economy to constant growth. Another indication is the decline in

poverty rates and its Gini coefficient. The poverty rate decreases from 23.3% in 2015 to 16.6%

in 2018 while the Gini coefficient declined from 44.9 to 42.7 over the same period [ CITATION

Wor21 \l 1033 ].

During the 1970s to 2000s the Philippines was considered the “sick man” of Asia, due to

the low economic growth in comparison with Southeast & East Asian neighbors. The resurgence

happened in 2010 onwards mainly due to the increase in private consumption, on the demand

side, and services, on the supply side. The private consumption is fueled partly by Overseas

Filipino Workers (OFW) remittances over two-thirds of GDP and services over one-half of GDP.

Moreover, about 1 million new employment was generated between Oct 2013 & Oct 2014.

While the unemployment rate decline, the underemployment remains stubbornly high[ CITATION

Bal15 \l 1033 ].

One of the obstacles for the constant economic growth of the Philippines is the

geographical location which makes it particularly vulnerable to disasters such as typhoons,

earthquakes, and volcanic eruption. A series of disasters has caused substantial damage to

agriculture, infrastructure, and the economy, as well as a huge loss of lives. An example is the

aftermath of the typhoon Yolanda in late 2013, which damaged 1.1 million houses, destroyed 33

million coconut trees which is a major source of livelihoods, and disrupted the livelihoods of 5.9

million workers in Visayas. The overall damage is estimated at $5.8 billion [ CITATION Aba2013 \l
1033 ]. This made a small disruption on the economic growth as the Philippine GDP constant

growth slowed in the first quarter of 2014. On the contrary, after recovering from the disaster,

the strong performance of industry sector mainly by manufacturing, construction and supported

by the trade, real estate, renting & business activities, and transport accelerated the 2014 GDP of

the Philippines with a 6.9% compared to year 2013 with 6.3% during the fourth quarter[ CITATION

GOV15 \l 1033 ]. Looking at the supply side, the services sector continued to be the main driver of

growth, contributing 3.8 percentage points to overall growth, while agriculture remained weak.

On the demand side, growth continued to be led by private construction, and to some extent,

durable equipment, and infrastructure spending. Furthermore, the recovery of net exports after 5

quarters of contraction contributed to growth[ CITATION Wor14 \l 1033 ].

The domestic demand in the year 2015 to 2016 remained robust. Considering that the

inflation is under control, and the decreasing oil prices leads to lower inflation. This stretches a

further boost to consumer spending. Public finances are healthy, supporting continued

government spending. Similarly, the external macroeconomic situation is robust, with a

manageable foreign debt of 18% of GDP and the 65% of exports of goods and services in 2016

[ CITATION Atr16 \l 1033 ]. On the demand side, remittances have long been a driver of

consumption and of the economy’s growth. While on the supply side, the predominant services

sector is supported by the information technology-business process outsourcing (IT-BPO),

finance, real estate, and tourism industries. In recent years, however, the country has seen new

opportunities for economic growth in an upsurge in investment and in the resurgence of the

manufacturing industry[ CITATION KPM17 \l 1033 ].

The steady growth in the past few decades outpaced the population. Though poverty has

persisted, sustained economic expansion has led to rising household incomes. Between 1960 and
2015, average income has grown by a factor of 11: income per capita has grown from US$ 254.4

in 1960 to US$ 2,870.5 in 2014. This translates to an improved standard of living for many

Filipinos, with more people now earning enough to spend on an ever-increasing variety of goods

and services ranging from smartphones and movies to automobiles and housing. The relationship

between economic growth and average income is universal – for as long as the economy keeps

growing faster than the population, average incomes will rise over time. The positive prospects

of the Philippines for economic growth and the rise in per capita incomes will have implications

on consumption. Naturally, the two are positively related in that those who earn more have

greater spending power [ CITATION KPM17 \l 1033 ].

References

Aban, I. (2013). Philippines 'more and more vulnerable' to disasters - officials. Earth Journalism Network.
Retrieved from https://earthjournalism.net/stories/philippines-more-and-more-vulnerable-to-
disasters-officials

Atradius. (2016). Atradius Country Report: Asia Pacific. Atradius. Retrieved from file:///C:/Users/Jay
%20Isidro/Downloads/Country-Report-Asia-Pacific-2016-CRAPAC1601EN.pdf

Balisacan, A. (2015). The State of the Philippine Economy. Makati: Ayala-UPSE Economic Forum.
Retrieved from https://econ.upd.edu.ph/ayala-upse/wp-content/uploads/2015/02/Ayala-UPSE-
Forum_The-State-of-the-Economy_29Jan2015_final2a.pdf

GOVPH. (2015, January 29). Official Gazette. Retrieved from

https://www.officialgazette.gov.ph/2015/01/29/philippine-economy-grew-by-6-1-percent-in-
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KPMG. (2017). Philippine Consumer Market Report: 2017 Investment Guide. KPMG R.G. Manabat & Co.
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https://home.kpmg/content/dam/kpmg/ph/pdf/InvestmentGuide/KPMGPHPhilippineConsumer
MarketReport.pdf

World Bank. (2014). Philippine Economic Update, August 2014 edition. Retrieved from The World Bank:
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investment-to-sustain-growth-that-benefits-the-poor#:~:text=Economic%20and%20policy
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World Bank. (2021). The World Bank. Retrieved from

https://www.worldbank.org/en/country/philippines/overview