ECONOMIC

STATUS OF THE

PHILIPPINES
 ABSTRACT

A series of unforeseen events caused an abrupt halt to the Philippines' strong growth

momentum in early 2020. The Philippine economy carried its strong growth momentum

from the half of 2019 into early 2020 because of positive consumer confidence, robust

macroeconomic fundamentals, and an improvement within the external sector. However,

the eruption of Taal Volcano in early January, the spread of the Coronavirus Disease

2019 (COVID-19) outbreak within the region, and therefore the rise of COVID-19

infection cases within the Philippines in March, forced the economy to a near halt within

the latter a part of March because of severe disruptions in manufacturing, agriculture,

tourism and hospitality, construction, and trade. The economy contracted by 0.2 percent

year-on-year within the half-moon of 2020, the primary contraction in over twenty years,

and was a pointy reversal from the 5.7 percent growth over the identical period in 2019.

Leading indicators that track economic activity in real time suggest that the contraction

would be even more severe within the second quarter as most regions of the country

entered an enhanced community quarantine (ECQ) in mid-March.

 PRINCIPLES OF ECONOMICS

Decisions Involve Tradeoffs

This refers to the concept of making compromises. a personal may should give

something up to urge something else they have more. as an example, say you're offered

a chocolate or a lollipop. you've got ought to decide on to present up one to induce the

other.

Opportunity Cost of Resource

The second economic principle emphasizes the worth of whatever it's you gave up. as

an example, you took the lollipop, which has an economic profit, what you gain from the

choice, of $.85. But you had to convey up the chocolate, which had an economic profit of

$.45. So, you actually only gained $.40 for your choice. But if you didn’t have a choice

and were only offered the lollipop, you wouldn’t have given anything up and would have

gained an economic profit of $.85.

Cost-Benefit Analysis

This principle are going to be a small amount difficult to know. Marginal thinking

is to form small adjustments. as an example, a movie offers matinee prices. stage knows

fewer people see movies within the afternoon. the standard ticket price of the movie is

$10 and at that price the world will sell two tickets for a matinee show. But by offering a

$6 matinee price, stage ended up selling five tickets. By selling the tickets at a 40 percent

discount, stage actually made $10 more.

Response to Incentives

People answer different incentives in good or bad ways, but the aim is that we

respond. A bar might offer a buy one, get one free drink. the great side of the inducement

is free drinks, the bad side can be a collegian who forgoes studying to drink. Either way,

the response to the motivation was there.

Trading Services for Money

It is important to clarify that trades include using money to get something. Say

someone is skilled at giving massages. You get the massage, looking forward to the

present person, then trade your money as a payment.

Markets Organize Economic Activity

Markets are defined simply as a vicinity where people make an agreement, settle on a

price so communicate that to the world at large. The grocery, for example, has farmers

making an agreement to sell at a bunch price then supermarkets communicate that by

selling the food to the final public.

Government and Market Efficiency

The government may get involved if the market efficiency isn’t working or if the

market is failing to distribute. This failure is often caused by externality, which suggests

that the merchandise impacts over just the direct buyers and sellers. as an example, cars

benefit drivers, but emissions are a health concern for people.

Principal of Productivity

Simply put, this principle is productivity. The richer the country, the upper the

number of productivity.

Too Much Money Causes Inflation

This principle refers to inflation. Prices go up to reflect the amount of money being

printed. While the additional money makes people think they’re wealthier, inflation

causes prices to travel up which money loses variety of its value.

Inflation and Unemployment Tradeoff

Also cited because the Phillips Curve, this principle says that you just simply can’t

keep unemployment low and inflation under control at the identical time and, therefore,

create a tradeoff.
 ECONOMIC SYSTEM

Out of the four economic systems, the Philippines contains a mixed financial system.

within the Philippines, there's a mix of the weather of a market and of a command

economy. a signal of this is able to be the existence of public schools (funded by the

government) alongside private schools (individually owned).

I think the foremost appropriate financial system for the Philippines would be because

it is now, with a mixed financial set-up. a conventional financial set-up wouldn't suit the

Philippines in my opinion because it lacks mobility and freedom of choice (things

Filipinos value and strive for). I also think that a command national economy wouldn't

suit the Philippines, because I think that our government isn't efficient or trustworthy

enough to require full control of the economy. A market national economy could work,

but it's my opinion that the govt should play a task within the allocation and distribution

of resources to make sure an honest standard of living for everybody. Therefore, for these

reasons, I feel that a mixed financial system is best for the Philippines.
 TYPE OF MARKET

The Philippines includes an economy with privately-owned businesses regulated by

government policy. it's considered a newly industrialized economy and emerging market,

which suggests it's changing from an agricultural-based economy to at least one with

more services and manufacturing.

The economy here is that the 36th largest within the world and also the 3rd largest of

the Association of Southeast Asian Nations (ASEAN). In 2019, its nominal gross

domestic product (GDP) was $356 billion and therefore the GDP per capita was $3,280,

as per the IMF. This country includes a workforce of 64.8 million and a percentage of

4.7%. in step with the Philippines Statistics Authority, of those employed individuals,

55.9% add the services sector. this is often followed by agriculture (26%) and industry

(18.1%).

The leading industry of the Philippines is that the services sector which contributes

55.9% of the GDP. Industry, although only providing 18.1% of employment, contributes

around 33.48% of the GDP. Agriculture only provides 9.49% of the GDP. The leading

manufactured goods include: electronics assembly, chemicals, food manufacturing,

shipbuilding, textiles, fishing, refinery, and business process outsourcing.

According to the OEC, the Philippines exported $99 billion worth of products. Its

principal exports include: integrated circuits ($32.2 billion), office machine parts ($10

billion), computers ($5.19 billion), semiconductor devices ($3.34 billion, and insulated
wire ($2.42 billion). an outsized percentage of its exports visit the following countries:

China ($20 billion), city ($14.8 billion), the US ($13 billion), Japan ($11.4 billion), and

Germany ($5.3 billion).

Imports to the Philippines totaled $105 billion. Its major imports include integrated

circuits (11%), refined petroleum (5.4%), and cars (4.5%).

 BEHAVIOR OF THE CONSUMERS

The Filipino buying behavior is influenced by various factors like family, friends,

relatives, and colleagues. Over the years, this buying behavior was already full of modern

philosophy as influenced by Asians, Americans and Europeans, and therefore the like.

This paper explains the buyer attitudes on buying behavior that surrounds the standard

Filipino style and highlights their own consumer buying identity. In many cases,

relations, friends, and colleagues are the standard influencers to Filipino consumers. they

typically listen for the recommendation of individuals around them in choosing the brand

that may suit their needs and needs. apart from personal things, this may be done alone

without introducing a product that's ried and tested. In some cases, it will be either way as

some products require knowledge and tests.

Shopping has become a part of daily routine of the everyday Filipinos as they

typically seek for goods they need to do with. Such buying habits became a part of their

lives. within the Philippine settings, there are plenty of existing malls that may offer

almost anything and everything for the full family. In simple terms, the shopping precinct

is taken into an account a “One stop shop” as many buyers call it. no matter status within

the society, many Filipinos like to shop as they might wish to showcase the bonding (ties)

together of the foremost important aspects of Philippine culture which is extremely

unique and distinct. In fact, the Philippines is proud to possess 3 of the biggest malls

within the world today. With the existence of massive malls within the Philippines,
shopping is seen as a convenient and enjoyable activity among Filipinos that has become

a part of their daily routine in terms of shopping for their favorite products and services.
 MONETARY AND FISCAL POLICIES

At its 6 February monetary policy meeting, the institution of the Philippines (BSP) cut

the overnight reverse repurchase facility (RRP) from 4.00% to 3.75%, as had been

expected by market analysts. Accordingly, the overnight deposit facility (ODF) and also

the overnight lending facility (OLF) rates—which establish the bottom and thus the

ceiling of the charge per unit corridor—were also reduced to 3.25% and 4.25%,

respectively. The Bank’s first move of this year follows cuts totaling 75 basis points in

2019.

The Bank’s decision to cut rates was a preemptive strike to ward off a slowdown from

temporary domestic economic disruptions and growing uncertainty over the global

economy amid growing concerns about the coronavirus. The Bank’s assessment of the

economic trajectory was notably more downbeat in February from its last meeting in

December. It highlighted the likely toll of the recent Tall volcano eruption and Typhoon

Tisoy on economic activity, which have disrupted supply chains, weighed on tourism,

and pushed up food prices. Moreover, lingering uncertainty over global trade and

geopolitical tensions remain on the periphery. The BSP also highlighted the recent

outbreak of the coronavirus in China: It has already dampened market sentiment and

could drag on growth in Asia’s largest economy, which is also an important export

market for the Philippines. That said, the Bank did state that “recent demand indicators

still point to a firm outlook for the domestic economy”.

 Turning to inflation, expectations for this year remain well anchored. Inflation jumped

to 2.9% in January (December: 2.5%), approaching the midpoint of the Bank’s target

range of three.0% plus or minus 1.0 mathematical notation. Moreover, the BSP sees

inflation remaining comfortably within the target range this year and next, despite a little

upward bias in risks to the outlook for 2020. Upside pressures largely stem from the

African swine fever’s impact on food prices and tighter international rice supply.

In its communiqué, the BSP stated that it “will remain watchful over emerging price

and output conditions” returning to its wait-and-see approach, as its prior easing

continues to require effect. Nevertheless, the discharge was relatively destitute of further

forward guidance. In January, the bulk of Focus Economics panelists expected the Bank

would end its easing cycle after this February cut. Our panelists are taking recent

developments into consideration and new forecasts are available 25 February.

Fiscal Policy are measures employed by governments to stabilize the economy,

specifically by manipulating the quantity and allocations of taxes and government

expenditures. Fiscal measures are frequently employed in tandem with monetary policy

to realize certain goals." within the Philippines, this is often characterized by continuous

and increasing levels of debt and budget deficits, though there are improvements within

the previous few years. The Philippine government's main source of revenue are taxes,

with some non-tax revenue also being collected. To finance fiscal deficit and debt, the

Philippines relies on both domestic and external sources. Fiscal policy during the Marcos

administration was primarily focused on aggregation and on government spending on

economic services and infrastructure development. the first Aquino administration

inherited an outsized fiscal deficit from the previous administration, but managed to cut

back fiscal imbalance and improve collection through the introduction of the 1986 Tax

Reform Program and also the worth added tax. The Ramos administration experienced

budget surpluses due to substantial gains from the massive sale of state assets and

powerful foreign investment in years and administrations. The Estrada administration

faced an oversized fiscal deficit thanks to the decrease in tax effort and also the

repayment of the Ramos administration's debt to contractors and suppliers. During the

Arroyo administration, the Expanded Value-Added jurisprudence was enacted, national

debt-to-GDP ratio peaked, and underspending on public infrastructure and other capital

expenditures was observed.

 EMPLOYMENT AND UNEMPLOYMENT STATUS

Employment Rate in Philippines increased to 91.27 percent in the second quarter of

2021 from 91.25 percent in the first quarter of 2021.

The Unemployment percentage within the Philippines plunged to 8.7 % within the

June quarter of 2021 from a downwardly revised 17.6 percent within the same quarter a

year earlier, because the economy recovered from the COVID-19 slump. the quantity of

unemployed persons declined by 3.09 thousand to 4.14 million, while the quantity of

employed fell by 4.08 thousand to 41.25 million. Meanwhile, the labor pool participation

rate jumped to 63.2 within the second quarter from 55.7 the prior year. Among employed

persons, workers within the services sector made up 50.5 percent of the overall, followed

by those within the agriculture sector (30.4 percent) and industry (19.1 percent).