Economy of Philippines

According to cheeroutdoor, the Philippines is one of the five most advanced economies in Southeast Asia, known as the “Asian Tigers” of the second wave. The economic policy of all governments of the period of independence reflected the nature of the political regime, for example, authoritarian under F. Marcos, “new democracy” under C. Aquino, F. Ramos, G. Arroyo. The Philippines later than other states of the “five” (it includes, in addition to the Philippines, Singapore, Malaysia, Thailand and Indonesia) began to modernize the economy. The country suffered several serious economic and socio-political crises, which greatly weakened the economy and hindered its modernization. Since 2000, the negative impact on the Philippines of the recession in the world economy, especially in the United States, and the aggravation of the socio-political situation in the country itself, incl. separatist armed uprisings in Muslim areas in the South. The restructuring of the economy is hindered by corrupt bureaucracy and management of the so-called. crowns, or “friends”. Important economic reforms remain largely on paper.

Since the 1970s The Philippines began to lag behind other economically more developed countries in Southeast Asia in terms of economic growth. In 2003, the economic growth rate increased to 4.5%, and the volume of GDP – up to 80 billion US dollars.

In the consumption of GDP, the share of personal consumption is the highest: in 2001 it amounted to 2561.2 billion pesos, exceeding 5.8 times government spending and 4.1 times gross savings. Gross national income per capita in 2001 amounted to 1050 US dollars, and more than 1/4 of the population was below the poverty line. Most of this group is in rural areas. A sharp problem remains a sharp inequality in the distribution of income. Inflation 4.5% (2003).

3/4 of the labor force, or 32.5 million people, was the labor force, incl. 29.4 million were employed and 3.1 million were unemployed. With an increase in the technological level of production, the quality of labor indicators changes – the number of qualified specialists grows. Labor legislation is in force from con. 1980s and applies only to a minority of the labor force – members of trade unions. It determines wage matters, including minimums and allowances, working hours, and so on. Pensions and other benefits are provided by two insurance organizations, unemployment assistance is provided exclusively by charitable organizations.

Sectoral structure of GDP (1981 and 2001,%): industry 39.2 and 31.2, agriculture 24.9 and 15.2, services 35.9 and 53.6.

In industry, the greatest changes in the technical level have taken place in the largest group of industries, the manufacturing industry. But its share (as well as the entire industrial sector) has decreased to 22.4% of GDP in 2001; the share of construction increased to 5.4%, utilities to 3%, and mining decreased to 0.2%. The structure of the manufacturing industry is changing most noticeably due to an increase in the production of high-tech products for export.

In agriculture, the most backward sector of GDP, 2/3 of the value falls on agriculture, 1/3 – on other sectors – livestock, poultry, fisheries and forestry. Rice and corn, vegetables and fruits are mainly grown for the local market, but there is not enough food of their own.

The largest branch of the service sector is trade, which accounted for 14.6% of GDP in 2001, followed by personal and government services with 11.7 and 9.9% respectively, other services (real estate transactions, transport, communications, warehousing economy and financial transactions) – 17.4%. Trade, both in terms of value and number of employees, dominates among other services. Wholesale prices are growing more slowly than consumer prices – in 2001 they increased to 134.7 points at 1995 = 100, and consumer prices – up to 149.6 points.

In the Philippines, an island and mountainous country, an important place is occupied by the transportation of passengers and goods by road and shipping. There are few railroads. Air traffic is poorly developed. The communication system – telephone, telegraph and telex – does not satisfy the needs of the population in its services. In terms of the development of foreign tourism – the income received from it and the number of tourists – the Philippines lags far behind the most economically advanced countries in Southeast Asia. In 2002, the number of tourists from the USA, Japan, China, the EU, Australia and other countries was approx. 3 million people

The central bank, established in 1949, manages and controls the credit and financial system. It manages gold and foreign exchange reserves, maintains the peso exchange rate, carries out foreign exchange transactions, controls the operations of commercial banks, and performs other functions. The credit and financial system is dominated by commercial banks. The volume of resources of development banks, savings and agricultural, insurance is much less. Usury persisted in rural areas. Domestic and foreign loans and credits are one of the main forms of financing the economic development of the Philippines. The national capital market is poorly developed. The role of the stock exchanges (Manila, Makati, Metropolitan) in the mobilization of capital remains insignificant. The government makes extensive use of state credit to cover the state budget deficit. Foreign loans lead to an increase in external debt, which in 2001 was 73.3%, or 2/3 of GDP, with foreign exchange reserves of 13.44 billion US dollars and gold reserves of 2.2 billion US dollars, or 4 times higher than them. Net foreign exchange reserves as of May 2003 were $12.5 billion.

The current monetary system was introduced with the creation of a central bank, which was assigned the right to control money circulation and the monopoly right to issue money against the security of foreign exchange reserves, commercial bills, government securities, etc. The structure of money circulation is dominated by deposit money. To the beginning 2002 of the 2139.0 billion pesos in circulation, they accounted for 1746.8 billion pesos, cash – 392.25 billion.

In public finance, a special place is occupied by the state budget, the basis of which is the central budget. It finances local budgets. The bulk of income is tax revenue. Expenses go mainly to finance social and economic development. The state budget for the most part is reduced to a deficit, especially from the con. 1990s Revenues in 2001 amounted to 561.9 billion pesos, expenses – 706.4 billion i.e. the deficit accounted for almost 150 billion pesos. In 2002 it increased to over 200 billion pesos, or 3.3% of GDP. In 2003, it was expected to grow to 4.7% of GDP. The use of loans from international financial institutions and individual states to cover the deficit, in addition to loans from the central and commercial banks, leads to an increase in external debt.

Economy of Philippines