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I hereby declare that the report entitled “COUNTRY ANALYSIS: PHILIPPINES”
submitted to the Tamil Nadu National Law School, Trichy, is a record of an original work

done by me under the guidance of Prof. SATHYAMOORTHI, Faculty In charge for
Economics, and this report is submitted in the partial fulfillment of the requirements for the
award of the degree of B.A., LL.B (Hons.). The results embodied in this report have not been
submitted to any other University or Institute for the award of any degree or diploma.

Date: 5 October 2015.

Register No: BA0140073




ECONOMIC SNAPSHOT...................................................................................5
ECONOMIC HISTORY OF PHILIPPINES........................................................8
GDP – COMPOSITION BY SECTOR OF ORIGIN...........................................11
INTEREST RATE................................................................................................13
FISCAL POLICY.................................................................................................15

..................... XVII...........................................................17 BOP ANALYSIS............24 ........18 ECONOMIC CRISIS OF 2008............................................................................................................................. XVI................ XIII.......................3 XI.......23 REFERENCES................................................................................................... XVIII............................................................... XIV..............................................................................................................................................................16 TRADE................................. XV...........22 CONCLUSION............................20 FINANCIAL MARKETS..............15 FDI AND FII............................................. CURRENCY......19 INTERNATIONAL TRADE MEMBERSHIP............................................................................................................ XX...............................................20 SWOT ANALYSIS.......................................... XII............ XIX.........

and fruits. South Korea.686 billion. World Trade Organization. Taiwan. after World War II.40 PM. Japan. which has been transitioning from being one based on agriculture to one based more on services and manufacturing. Today the majority of Filipinos are Christians.2 1 <http://www. the islands were ceded to the United>. last visited on 13-09-2015 at 09. the Philippines is the seventh-most populated country in Asia and the 12th most populated country in the world. the largest island where the capital is located. widely spoken and understood. .cia. 2 <https://www. and Thailand. It is a founding member of the United Nations. With a population of about 100 million people. transport equipment. The national language is Pilipino although there are at least 87 regional dialects.25 PM. and Christianity was introduced to the country. The Philippines achieved full independence on July 4.000>. and is also one of the emerging markets with an estimated 2014 gross domestic product (nominal) of $289. is the language used for most business and legal transactions. Visayas. while the larger minority groups are Muslims and pagan hill tribes. The Philippines became independent in 1946. Singapore. last visited on 13-09-2015 at 09. coconut oil. comprising more than 7. In the 16th century. according to 2014 International Monetary Fund statistics. known for its fine beaches and idyllic coves. Hokkien. 1946. Germany. Primary exports include semiconductors and electronic products. Hong Kong. In 1898. and Mandarin are spoken by older members of the Filipino-Chinese community. Mindanao. Manila. Cantonese. It also hosts the headquarters of the Asian Development Bank. copper products. and East Asia Summit. Association of Southeast Asian Nations. English. The Economy of the Philippines is the 39th largest in the world.imf. China. the Netherlands. The Philippines is considered to be an emerging market and a newly industrialized country. garments. Major trading partners include the United States. petroleum products. The nation's large population size and economic potential have led it to be classified as a middle power.4 INTRODUCTION The Philippines is a Southeast Asian country in the Western Pacific. the Philippines became a Spanish colony. It has three major island groups: Luzon. is famous for its waterfront promenade and centuries-old Chinatown. where exotic forest make it an irresistible haven for nature lovers. Its sprawling capital.1 Its unit of currency is the Philippine peso (₱ or PHP).

alter.58 billion US dollars in 2014. It is made up of a Supreme Court and lower courts. reaching an all-time high of 284.58 USD Billion in 2014 and a record low of 4. The Gross Domestic Product (GDP) in Philippines was worth 284. ordinance or regulation unconstitutional. last visited on 14-09-2015. The Legislative branch is authorized to make laws. 4 <http://www. This institution is divided into the Senate and the House of Representatives. on products not included in the values of their outputs). These departments form a large portion of the country’s bureaucracy.96 USD Billion from 1960 until 2014. instruction.46 percent of the world economy. The Constitution grants the President authority to appoint his Cabinet. One basic corollary in a presidential system of government is the principle of separation of powers wherein legislation belongs to Congress. and judicial. The Constitution expressly grants the Supreme Court the power of Judicial Review as the power to declare a treaty. . execution to the Executive. international or executive agreement. the sum of gross value added of all resident institutional units engaged in production (plus any taxes.5 ECONOMIC SNAPSHOT A) FORM OF GOVERNMENT: The Philippines is a republic with a presidential form of government wherein power is equally divided among its three branches: executive. The Executive branch is composed of the President and the Vice President who are elected by direct popular vote and serve a term of six years.tradingeconomics. presidential decree. and settlement of legal controversies to the Judiciary. This branch determines whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part and instrumentality of the government. The GDP value of Philippines represents 0.4 GDP grew 3 <>.40 USD Billion in 1962. last visited on 14-09-2015.3 B) GDP: Gross Domestic Product refers to the value of all goods and services produced domestically. GDP in Philippines averaged 64. and minus any subsidies. and repeal them through the power vested in the Philippine>. proclamation. GDP in Philippines is reported by the World Bank. order. The Judicial branch holds the power to settle controversies involving rights that are legally demandable and enforceable. law.

643.worldometers. and 5) development of policies and programs relative to the delivery of basic social services.496 as of July 1 2014. last visited on 14-09-2015.960 people in 2014). The median age in the Philippines is 23. Businesses and industries use the statistical information from the census in the identification of sites for establishing businesses and determining consumer demands and supply of labor for the production of various goods and C) POPULATION: The population of the Philippines is estimated at 100. Total area is the sum of land and water areas within international boundaries and coastlines of> .7 D) UNEMPLOYMENT: 5 <http://www.38% of the total world population. Updated information on the size of the population will provide government planners.asp/>. last visited on 16-092015. . municipalities. The total area of Philippines is 300 000 km2 according to the United Nations Statistics Division.6 percent in the second quarter of 2015. 50% of the population is urban (49. such as the Internal Revenue Allotment for LGUs. last visited on 16-09-2015. 6 http://www. Other Services Real Estate. The Philippines ranks number 12 in the list of countries by population. cities. Philippines's population is equivalent to 1.nscb. in government.6 year-on-year by 5.6 Density of population is calculated as permanently settled population of Philippines divided by total area of the country.7 percent in the same period last year but higher than the growth rate of 5. Specifically. The population density in the Philippines is 334 people per Km2. 3) creation/conversion of political and administrative policy makers and administrators with data on which to base their social and economic development plans and program. Renting & Business Activities. 7< and barangays. The second quarter growth was driven by the Services sector with the positive growth exhibited by Trade. This is lower than the 6.2 years. such as provinces. and supported by the growth of Manufacturing and> .0 percent in the first quarter of 2015. 2) allocation of resources and revenues. it serves as basis for: 1) redistricting and apportionment of congressional seats. 4) formulation of policies concerning various segments of the population.

Getting electricity. Protecting investors. Unemployment Rate in Philippines is reported by the National Statistics Office of Philippines.50 percent in the third quarter of 2015 from 6. Resolving insolvency.90 percent in the first quarter of 2000 and a record low of 6 percent in the fourth quarter of 2014. it would take 34 days to open a business. last visited on 16-09-2015. making the Philippines more internationally competitive and attractive to investments. In 2013. each consisting of several indicators. . 42 days to get electricity power. E) COUNTRY RATINGS: Last May 8. 2014. Standard & Poor’s Financial Services (S&P) upgraded the Philippines’ long-term sovereign credit rating from BBB.82 percent from 1994 until 2015. This set the country’s credit rating a notch higher than the minimum investment grade status granted to it by S&P on May 2.Stable to BBB Stable. as a result of the stable economic progress due to the reforms the country experiences thus far. Registering property. Trading across borders. reaching an all-time high of 13. and 15 days and $915 to import a container.8 F) EASE OF DOING BUSINESS: The ease of doing business index is an index created by the World Bank>. Getting credit. from 1–189. Economies are ranked on their ease of doing business. “Stable” means the rating has a “stable outlook”. according to the latest report. A nation's ranking on the index is based on the average of 10 sub-indices: Starting a business. But due to data corrections in methodology changes. The Philippines showed downward rankings in 8 <http://www. This credit rating is also projected to be sustained and further upgraded in the coming months.40 percent in the second quarter of 2015. giving equal weight to each topic.7 Unemployment Rate in Philippines increased to 6. The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics. This grade gives the Philippines a good financial reputation to potential foreign investors for 2014 and the years to come. The report showed that in the Philippines. Enforcing contracts. the Philippines leapfrogged 30 notches in the global survey to 108th. it is likely not to change within a year. A BBB Stable credit rating for the country means the Philippines has an adequate capacity to pay its debts fully and on time. Dealing with construction permits. the Philippine ranking moved to 86th. Paying taxes. and now to 95th spot in terms of ease of doing business. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm. Unemployment Rate in Philippines averaged 8. the highest rating ever recorded in the country’s history.

and trading across borders. In the 2013 Human Development Report titled "The Rise of the South: Human Progress in a Diverse World." A severe recession in 1984-85 saw the economy shrink by more than 10%. namely.8 areas of starting a business. while an index of 100 implies perfect inequality. in some cases. and a decent standard of>. but slowed over time. In less than 20 years. G) HUMAN DEVELOPMENT INDEX: The Human Development Index (HDI) is a tool to measure the overall achievements in three basic dimensions of human development.0. not an end. still slightly below the East Asia and the Pacific regional average of 0. ECONOMIC HISTORY OF PHILIPPINES The Philippine economy has experienced repeated boom-and-bust cycles in the 5 decades since the nation achieved independence from the United States in 1946. and there is no automatic link between income growth and human progress. protecting minority investors. Growth immediately after the war was rapid." the UNDP said the Philippines' HDI score has been improving in the past 30 years. During his administration. In 1981. It is premised on the principle that human development cannot be measured by the yardstick of income alone since income is a means.654 -.rappler. consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. I) RANKING BY SIZE AND POPULATION: Philippines is ranked 12th by population according to the report in 2014 and ranked 72nd by size among the other countries. the Philippines had gone from relative prosperity to becoming the "sick man of Asia. longevity. paying taxes.683. GINI index in Philippines was last measured at 42. according to the World Bank. last visited on 16-09-2015. foreign debt ballooned. the World Bank report showed. Over the years. and the country's economy plummeted. democratic institutions in the country had severely eroded.9 H) GINI COEFFICIENT: Gini index measures the extent to which the distribution of income (or. the Philippines has gone from being one of the richest countries in Asia (following Japan) to being one of the poorest. But its score -. Thus a Gini index of 0 represents perfect equality. . President 9 <http://www.98 in 2009. and perceptions of political instability during the Aquino administration further dampened economic activity. The Philippine Human Development Reports measures these dimensions across provinces.

and the privatization of government corporations that brought the economy back to its feet. form the basis for the country weights used to generate the World Economic Outlook country group composites for the domestic economy. GDP (PPP).PPP (Purchasing Power Parity) : Gross domestic product based on purchasing-power-parity (PPP). The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time. Philippines ranks 39th among the countries in the world as per the 2014 records of International Monetary Fund (IMF). on December 01. to liberalize foreign participation in the retail trade sector. President Estrada managed to continue some of the reforms begun by the Ramos administration. As a result. and to promote and regulate electronic commerce were enacted during his abbreviated term. a) Nominal GDP: Most recently. fiscal problems remain one of the economy's weakest points and its biggest vulnerability. However. but the Asian financial crisis triggered in 1997 slowed economic development in the Philippines once again. Philippines nominal GDP was 284.9 Ramos introduced a broad range of economic reforms and initiatives designed to spur business growth and foreign investment. The gross domestic product (GDP) is one of the primary indicators used to gauge the health of a country's economy. Despite occasional challenges to her presidency and resistance to pro-liberalization reforms by vested interests. GDP The gross domestic product (GDP) measures of national income and output for a given country's economy. US Dollars for Philippines in year 2014 is US$ 694. This makes Philippines No. the Aquino administration passed various critical laws such as a liberal Foreign Investment Act.615 Billion. 2013. you can think of it as the size of the economy. the Philippines saw a period of higher growth. President Gloria Macapagal-Arroyo has made considerable progress in restoring macroeconomic stability with the help of a well-regarded economic team. the Comprehensive Agrarian Reform Law.750 USD Mn. 29 in world rankings . Important laws to strengthen regulation and supervision of the banking system (General Banking Act) and securities markets (Securities Regulation Code). The nominal GDP increased from 271. During this period. b) GDP. despite recent progress.731 US Mn reported on December 01. It represents the total dollar value of all goods and services produced over a specific time period. 2014.

181 6. Year 2015 2014 2013 2012 2011 % 6.532. Year US $ Billion 2015 751.771 2010 513. d) GDP Growth: GDP Growth (Constant Prices.66 . GDP Growth for Philippines was 7.08 Billion. This makes Philippines No. In the year 2013. In the forecasted year 2015.08 Billion GDP (PPP). US Dollars in year 2014. 29th in GDP based on PPP. which is 8.182 2011 543. GDP (PPP).963 Source: IMF.77 2014 694.77 Billion.265 6.18 %.23% more than the 2014 figure.801 3. The world's average GDP Growth is 3. In the forecasted year 2015. In the year 2013.615 2013 643. 26 in world rankings according to GDP Growth in year 2014. Philippines ranks 36th in Nominal GDP.17% less than it was in 2013. c) GDP Rank: According to International Monetary Fund World Economic Outlook (April-2015) report. National Currency) for Philippines in year 2014 is 6. GDP (PPP). GDP Growth for Philippines will be 6. which is 0.235 7. The world's average GDP (PPP). GDP Growth for Philippines in 2014 was 13. US Dollars for Philippines in 2014 was 8.48% more than the 2014 figure.27 %.13 more than the average.47 less than the average.11 %.235 %. US Dollars for Philippines was US$ 643.076 2012 591.10 according to GDP (PPP). US Dollars for Philippines will be US$751.01% more than it was in 2013. US Dollars value is US$ 2227. Philippines is US$ 1. Philippines is 3.

the most important categories in the Consumer Price Index are: food and nonalcoholic beverages (39 percent of total weight).060. transportation.21% more than the 2014 figure. In Philippines. Data are derived by dividing current price GDP by total population. In the year 2013.187.60 percent in August of 2015. electricity. finance.461. Inflation Rate in Philippines is reported by the National Statistics Office of Philippines. GDP Per Capita for Philippines in 2014 was 8. gas and other fuels (22 percent) and transport (8 percent). Inflation Rate in Philippines averaged 8. Services cover government activities. Industry includes mining.93 110. The distribution gives the percentage contribution of agriculture. Agriculture includes farming. communication (2 percent) and .93. and will total 100 percent of GDP if the data are complete. services: 57.4%. GDP Per Capita for Philippines will be PHP 138.21 103. clothing and footwear (3 percent). and construction.87 97. manufacturing. e) GDP Per Capita: GDP is expressed in current national currency per person.716. National Currency) for Philippines is PHP 128.80 percent in September of 1984 and a record low of -2.187.716. INFLATION The inflation rate in Philippines was recorded at 0. In the forecasted year 2015. water.21% more than it was in 2013. GDP Per Capita (Current Prices.69. The 2014 estimate of contribution is agriculture: 11. industry.11 2010 7. energy production.74 percent from 1958 until 2015. GDP – COMPOSITION BY SECTOR OF ORIGIN This entry shows where production takes place in an economy.461. reaching an all-time high of 62.80 Source: IMF.229.306. and all other private economic activities that do not produce material goods. The index also includes health (3 percent). which is 8. communications. Year 2015 2014 2013 2012 2011 2010 GDP Per Capita 138. GDP Per Capita for Philippines was PHP 118. industry: 31.16. and services to total GDP. and forestry.69 128.3%.10 percent in January of 1959.2%.16 118. education (3 percent). fishing.632 Source: IMF. housing.

Alcoholic beverages. restaurants and other goods and services account for the remaining 15 percent.6 percent. INTEREST RATE In Philippines. The central bank of the Republic of the Philippines is . It is the lowest figure in more than two decades as cost of housing and utilities and transport declined further and prices of food and non-alcoholic beverages slowed. The official interest rate is the reverse repo rate (RR/P) which is the overnight borrowing rate. Core inflation also declined to a record low of 1. interest rate decisions are taken by The Monetary Board of The Bangko Sentral ng Pilipinas (BSP). furnishing.12 recreation and culture (2 percent). tobacco. Source: Philippines Statistics Authority. household equipment.

which is 1. Year 2015 2014 2013 2012 2011 2010 Million 101. Philippines central bank remained its overnight borrowing rate unchanged at 4 percent for the eighth consecutive time on September 24th.28 more than the average. Philippines is 2. The world's average Population value is 37.42 Million.2 % of the population is below poverty line.13 committed to promote and maintain price stability and provide proactive leadership in bringing about a strong financial system conducive to a balanced and sustainable growth of the economy.423 99. In the forecasted year 2015.434 Million.48 Million.00% more than the 2014 figure.82% less than it was in 2013. In the forecasted year. In the year 2013.2 92. Interest Rate in Philippines averaged 9.50 percent in September of 2012. The average inflation forecast was cut to 1.9%.8 94. Unemployment Rate for Philippines was 7. Population for Philippines will be 101.84 more than the average.10 %. Population for Philippines in 2014 was 2.45% less than the 2014 figure. reaching an all-time high of 56.62 %. This makes Philippines No.6 Source: IMF. POPULATION Population for Philippines in year 2014 is 99. UNEMPLOYMENT Unemployment rate is the percent of the labor force that is without jobs. Philippines is 61.6 percent from 1. The world's average Unemployment Rate value is 4.60 percent in December of 1990 and a record low of 3. This makes Philippines No. The 2014 estimate of unemployment rate is 6. In the year 2013.434 97. 12 in world rankings according to Population in year 2014. Population for Philippines was 97.8 percent in spite of the increased risks coming from stronger and protracted El Niño dry weather conditions. 54 in world rankings according to Unemployment Rate in year 2014. 25.59 Million. Unemployment Rate for Philippines in 2014 was 2. which is 2.00% more than it was or will be in 2013. Year % . 2015.484 95.52 percent from 1985 until 2015. Unemployment Rate for Philippines will be 6.80 %. Also. as widely expected.

But progress has been uneven and the Philippines still has one of the highest rates of unemployment in the Asian region. this series will be the same as their GDP in current prices. the number of people entering the job market has been greater than the number of jobs created. To finance fiscal deficit and debt." In the Philippines.025 7. in office since 2010. In three of the past five years. January to December).. Another factor may be the low quality of jobs available.10 FISCAL POLICY Fiscal policy refers to the "measures employed by governments to stabilize the economy.025 7. with some non-tax revenue also being collected. Gross domestic product corresponding to fiscal year is the country's GDP based on the same period during the year as their fiscal this is characterized by continuous and increasing levels of debt and budget deficits. specifically by manipulating the levels and allocations of taxes and government expenditures. . this series would be the country's GDP over that same period.746. Current Prices for Philippines is PHP 12. Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals. unemployment has fallen.17 Billions. though there have been improvements in the last few years.g. The latest figures show the rate at 6.325 Source: IMF.e. Fiscal Year Gross Domestic Product. The Aquino 10 <http://www. the Philippines relies on both domestic and external sources. Fiscal policy during the Marcos administration was primarily focused on indirect tax collection and on government spending on economic services and infrastructure development. down from 7 per cent a year earlier.1 7. Despite rapid economic growth in the Philippines in recent years. last visited on 30-09-2015.9 7.html>. One reason is that job creation has struggled to keep pace with an ever-expanding population. For countries whose fiscal data are based on a calendar year (i.8 6. July to June).4 per cent in the second quarter of this year. The Philippine government’s main source of revenue are taxes.cnbc. Under President Benigno Aquino.14 2015 2014 2013 2012 2011 2010 6.. In the case of countries whose fiscal data are based on a fiscal calendar (e. unemployment remains a persistent problem for the sprawling Southeast Asian nation of more than 100 million people.

The currency rankings show that the most popular Philippines Peso exchange rate is the PHP to USD rate. This experience allowed the exchange rates to appreciate continuously during that year to reach P24. and the currency symbol is ₱. By May 1995. CURRENCY The Philippine peso is derived from the Spanish silver coin Real de a Ocho or Spanish dollar. the implementation of the 1997 Comprehensive Tax Reform Program and the onset of the Asian Financial Crisis resulted to a deteriorating fiscal position in the succeeding years and administrations. p. The Ramos administration experienced budget surpluses due to substantial gains from the massive sale of government assets and strong foreign investment in its early years. the peso fell to P26 per US $ in April 1995. The currency code for Pesos is PHP. national debt-to-GDP ratio peaked. the stability of the peso was subjected to a major stress test arising from the contagion effect of the Mexican crisis. Between January and November 2014. in wide circulation in the Americas and Southeast Asia during the 17th and 18th centuries. but managed to reduce fiscal imbalance and improve tax collection through the introduction of the 1986 Tax Reform Program and the Value Added Tax.Towards the end of 1994 and the beginning of 1995.7 billion.11 FDI AND FII Foreign direct investment (FDI) has been rising steadily in recent years. and underspending on public infra structure and other capital expenditures was observed. Since then. the Expanded Value Added Tax Law was enacted. through its use in the Spanish colonies and even in the United States and Canada. Consequently. However. During the Arroyo administration. The Philippines experienced an upsurge in capital inflows beginning 1994. normalcy was restored as foreign capital inflows resumed. which represents a more than 60% 11 BSP Publication: February 1998. the peso-dollar exchange rate has remained generally stable and this state of affairs continued until the onset of the currency turmoil in July 1997.15 administration inherited a large fiscal deficit from the previous administration.42 per US $ by end-1994 from P27. FDI flows reached USD 5.70 per US $ at end-1993. The Estrada administration faced a large fiscal deficit due to the decrease in tax effort and the repayment of the Ramos administration's debt to contractors and suppliers. The Philippine peso was established on 1 May 1852. 4 .

16 increase compared to 2013.4 20.033 3.737 6. Lastly.093 Number of Greenfield Investments*** 96 129 158 FDI Inwards (in % of 4. the government favours subcontracting agreements between foreign companies and local enterprises rather than FDI in the strict sense of the term.12 Foreign Direct Investment 2012 2013 2014 FDI Inward Flow (million USD) 2. . With a few countries there is clearly a more intensive trade. the FDI flows remain relatively weak. last visited on 30-09-2015.276 57. This can be partially explained by the fact that the country is evolving into a service society with a low capital strength. inadequate infrastructures and not enough juridical security discourages investment. a strong cultural proximity to the United States and a geographical location in a dynamic area.0 Source: UNCTAD 2014. which means a need of minimal equipment. It means that the Philippines has to pay more for the products which are bought outside. TRADE The Philippines has a lot of trading partners.5 14.459 47. Considering the comparative advantages of the Philippines.7 10. than the earnings from selling products to foreign 12 <https://en.6 17. GFCF****) FDI Stock (in % of GDP) The Foreign Investments Information System (FIIS) was started in 1991 as a project to develop an integrated approach for generating and reporting foreign direct investments (FDI) in the Philippines. instability. The 'balance of trade' is the balance (the difference) between the value of the incoming products and the value of the outgoing>.santandertrade.201 FDI Stock (million USD) 36. such as an English speaking and well-skilled workforce. In addition.1 6. corruption. For the Philippines the 'balance of trade’ is negative for many years.

along with the total receipts from abroad. Semiconductor Devices (4. Office Top 5 Export destinations of The Machine Parts (3. Sponges. Lead Bars. United States Philippines (12%). Crude Petroleum (9.5%). Refined Petroleum ( countries. Vacuum Flasks Glass Inners.7%).8%).0%) Integrated Circuits (13%). including the price of exports and the inflow of capital and gold. The Philippines is the top exporter of Sulfides. Japan (13%). and Cars (2. In Philippine’s BOP. Office Machine Parts (3. Computers (10%). and Other Asia (6.3%). and Copper Springs. Fulminates.56 USD Thousand from 1957 until 2015. Balance of Trade in Philippines is reported by the National Statistics Office of Philippines. the estimated unreported international transactions 13 <https://atlas.6%).9%) China (23%).45 USD Thousand in November of 2011. United States (10%). Japan (11%).7%)13 BOP ANALYSIS The Balance of Payments (BOP) is a systematic record of a nation's total payments to foreign countries. The Philippines is ranked 46 with an Economic Complexity Index (ECI) of 0.8%). . including the price of imports and the outflow of capital and gold. Top 5 Products exported by The Philippines Integrated Circuits (23%). Hong Kong (9. Philippines recorded a trade deficit of 1176710 USD Thousand in July of 2015.513679. last visited on 01-10-2015. and Electrical Top 5 Products imported by The Philippines Transformers (3. there are large amounts of unreported or hidden international>. Felt Hats. That can be seen as a negative situation. Between 1990 and 2005. and Singapore Top 5 Import origins of The Philippines (5.4%) China (13%). reaching an all-time high of 1144700 USD Thousand in September of 1999 and a record low of -1657980. Balance of Trade in Philippines averaged -235933. South Korea (8.9%).

In such environment. They should be addressed. It means large amounts of resources remain hidden when funds are needed to finance economic growth and development and that these large amounts of resources are beyond social control. This denotes a fundamental problem with regards to the government’s regulatory capacity and management capability over external and other hidden transactions.18 totaled US$ 128 billion (in 1995 constant prices).14 ECONOMIC CRISIS OF 2008 14 <http://www. a reconsideration of capital management techniques to regulate capital flows and to strengthen prudential regulations in the domestic economy (including enhanced administrative capacity of the Bangko Sentral ng Pilipinas) is needed today. unsound debt management. unstable inflation. Perhaps. the stock market and real estate).g. last visited on 02-10-2015. . investments in speculative activities (e. such as a prevailing domestic investment anemia. remain important concerns to the Philippines. More importantly. too. when the economic environment is deregulated and liberalized. uncompetitive foreign exchange. the results indicate a weak or weakening capacity to direct resources into productive domestic investments to support industrialization and realize robust economic growth. which in turn lead to financial bubbles that contribute to an economic crisis. trade misinvoicing. it can be argued that capital inflows are more likely to be short-term in nature.php>.. that is. and complicated by the unceasing domestic political uncertainties. The policy implication is that there is a need to rethink policy and policy reforms in the Philippines. More specifically. together with large underutilized productive capacities.tradechakra. particularly during the financial liberalization period. the unrecorded international transactions point to other economic issues as well. but the mix of fiscal and monetary policies must be such that they stimulate robust economic performance and the corresponding adjustments in policies must sustain economic growth. The unsustainable current and fiscal deficits. there are more avenues available for financial flight. that further undermine domestic investments and sustain the unrecorded transactions. It is paradoxical that the magnitude of the unreported international transactions has been increasing. It indicates. These are very important in order to improve macroeconomic fundamentals and to create a robust macro performance. interest rates that discourage domestic investments.

and exports. Unemployment increased moderately. Asset prices experienced volatility but unlike the 1997 East Asian crisis. . This is definitely a problematic scenario given that the poverty situation in the Philippines deteriorated even when economic growth was relatively robust. A cause of concern is the widening fiscal deficit. the financial sector remained fairly stable. The Philippines was not spared the fallout from the crisis as GDP growth decelerated considerably in the fourth quarter of 2008 and first half of 2009. poor targeting. albeit at a lower rate.unicef. last visited on 02-10-2015. the resources to finance achievement of the Millennium Development Goals will likely be reduced. the Government embarked on a campaign to increase and expand social protection in response to the deteriorating poverty situation. but was more pronounced in the manufacturing sector which felt the brunt of the slowdown mainly through the export channel. Thus. even if preliminary survey data derived from the Community Based Monitoring System indicate a moderate adverse effect on the income and employment of lower income households. many social protection programs continue to be hindered by low coverage and inadequate benefits. another factor behind the wider fiscal deficit is the weak tax effort and if this persists. The Economic Resiliency Plan is a key component of the Government response to the crisis and 2009 first half data indicate modest success.15 INTERNATIONAL TRADE MEMBERSHIP 15<http://www. however. investment. To its credit. Remittances from overseas Filipino workers continued to _Crisis_on_the_Philippines. However. lower economic growth and fiscal troubles imply that the Government will not have enough resources to improve their situation in the medium term. In the wake of the crisis. Foreign exchange reserves therefore maintained an upward trend despite the fall in exports and larger capital outflows. resources were increased and programs were improved. which is largely due to the need to increase government expenditures to offset lower consumption. Exports from developing countries fell sharply dragging many of them into the global economic downturn.19 The 2008 global economic and financial crisis spawned a synchronized recession among industrialized countries leading to a contraction in world trade. This is a microcosm of the institutional problems that have constrained economic development in the Philippines over many decades. and operational constraints due to lack of coordination among program implementers. However.pdf>.

with the six largest commercial banks controlling around 60% of all bank assets. the Philippines have opened their economy to foreign markets. Since 1980s. As of 21st century. The largest component of the Philippine capital market is the fixed income securities market. . the Philippines have been an important centre for commerce for centuries for its ethnic minority. pre-need companies and pension funds. respectively. ASEAN and WTO. The unification of the two bourses in 1992 had promised to hasten development but as of 2001. the Chinese who were also its first occupants. insurance companies. The money market is where short-term funds are raised through the buying and selling of short term debt securities such as commercial papers. which itself is highly concentrated. the PSE has remained relatively small since its formation. The Philippine financial system is far from effective. with only 230 companies and half of a little over 300 issues active. The national government typically issues two kinds of instruments. The sector is highly dominated by banking. IPOs have remained few and far between. In1994. the country is member in several international trade organizations including the APEC. which deals with long-term debt securities such as bonds. The capital market is where long-term funds are raised through the bond market.20 Historically. The Philippine Stock Exchange (PSE) is the oldest in Asia. including banks and non-bank institutions. the stock market which deals with equity securities or stocks. treasury bills and treasury bonds. The Philippine financial sector comprises a variety of institutions. with21 new issues generating almost P37 billion (B). and established a network of free trade agreements with several countries. The Treasury bill market was born because of persistent government deficits. The archipelago has also been visited by Arabs and Indians for the purpose of trading in the first and early second millennium. The Philippines has been a World Trade Organization (WTO) member since 1 January 1995 and a member of General Agreement on Tariffs and Trade (GATT) since 27 December 1979. To date. the market was very active especially in the area of Initial Public Offerings (IPOs). The growth however was stalled by the onset of the Asian financial crisis with only four newly listed companies in 1998 and only one single company listed in 1999. namely. largely comprised of debt instruments issued by the government and private companies and held by banks. with maturity of lower than one year and longer than one year. FINANCIAL MARKETS Financial markets are classified into the money market and the capital market.

some of which hew close to the ideals mentioned above and some that do not. the Philippine capital market is inadequately developed. Economic Policy Reform & Advocacy. and channel resources to activities that will promote growth.usaid. had formulated a number of policies. the capital market on the other hand. protect the interests of savers by reducing their risks. The country needs an effective financial market system for sustainable and broad-based economic growth to happen. .pdf>. An effective financial system should be able to mobilize resources in the economy for productive investment. Ideally.21 While banks fail to mobilize enough savings. although one of the oldest in Asia. Clearly. uphold the growth of institutions that offer varied instruments and services to potential savers and investors. and lastly. remains underdeveloped with government debt papers dominating and accounting for almost 93% of total outstanding issues. allow businesses to produce more goods and hence.16 SWOT ANALYSIS Source: Business Monitor International Strengths:  Private consumption is a major driver of economic growth. last visited on last visited on 03-10-2015. The Philippine financial markets remain highly underdeveloped because of the policies and regulatory environment that surround the sector. A youthful and rapidly expanding population is likely to support these <http://pdf. throughout the history of financial development in the country. but more importantly. with virtually no corporate bond market existing. governments of developing countries should provide a policy and regulatory environment that encourages competition. the use of a variety of debt and equity instruments. Such an environment would encourage the growth of strong financial markets. The Philippine government. generating more than 70% of GDP. generate more jobs. 16 A Market for Reforms.

Threats:  Concerns persist over the underperformance of revenue collection agencies.5 percent. Growth in the Philippines has been on average about 5 percent since 2002. which are vulnerable to a weakening of the external economic environment since late  2008. CONCLUSION The Philippines is one of the most dynamic emerging markets in the East Asia region. The country has earned investment grade ratings from major credit rating agencies as a result of sound macroeconomic fundamentals characterized by . with a valuable source of foreign exchange. Opportunities:  The government could ease pressure on its fiscal accounts by broadening the tax base  and eliminating graft at the Bureau of Internal Revenue. spending inefficiencies as well as revenue  collection efficacy remain substantial concerns. the economic growth is expected to rebound to about 6. In 2015. Outsourcing could provide the Philippines. significantly higher than the rate achieved in the previous two decades. The export sector is geared towards manufactured products. if the government fully utilizes its budget as planned and accelerates reforms. Weaknesses:  Although the government has done well to decrease its fiscal deficit (particularly under the Aquino administration). Failure to improve tax collections will constrain further ratings improvements. The jobless rate will remain high as long as economic growth falls short of the level needed to create jobs for the fast-expanding labor force. especially electronics. with sound economic fundamentals and a competitive workforce that is globally recognized. which in turn  threatens to curb foreign investment. given its low-cost English-speaking workforce. Ongoing maritime dispute over claims to parts of the South China Sea raises China sanctions risk.22  Home-bound remittances from the 8 mn overseas Filipino workers are a key source of national income and provide much-needed support to the country’s consumption and balance of payments.

com/ the Philippines has proven itself resilient to food and fuel price hikes.worldometers.economywatch.cia. In recent years. Philippines is likely to become one of ASEAN’s largest consumer markets of the future. the global financial crisis and http://www. REFERENCES WEBSITES:            http://www. and the impact of typhoons and El Niño. and sound fiscal management.cnbc.nscb.worldbank. low and stable inflation.23 sustained .

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