ECONOMY

Since the end of World War II, the Philippines has been on an unfortunate economic trajectory, going from one of the richest countries in Asia (following Japan) to one of the poorest. Growth after the war was rapid, but slowed as years of economic mismanagement and political volatility during the Marcos regime contributed to economic stagnation and resulted in macroeconomic instability. A severe recession from 1984 through 1985 saw the economy shrink by more than 10%, and political instability during the Corazon Aquino administration further dampened economic activity. During the 1990s, the Philippine Government introduced a broad range of economic reforms designed to spur business growth and foreign investment. As a result, the Philippines saw a period of higher growth, although the Asian financial crisis in 1997 slowed Philippine economic development once again. Despite occasional challenges to her presidency and resistance to pro-liberalization reforms by vested interests, President Arroyo made considerable progress in restoring macroeconomic stability with the help of a well-regarded economic team. Nonetheless, long-term economic growth remains threatened by inadequate infrastructure and education systems, and trade and investment barriers. International competitiveness rankings have slipped. The service sector contributes more than half of overall Philippine economic output, followed by industry (about a third), and agriculture (less than 20%). Important industries include food processing; textiles and garments; electronics and automobile parts; and business process outsourcing. Most industries are concentrated in areas around metropolitan Manila. Mining has great potential in the Philippines, which possesses significant reserves of chromate, nickel, and copper. Significant offshore hydrocarbon finds have added to the country's substantial geothermal, hydro, and coal energy reserves. Today's Economy The Philippine economy proved comparatively well-equipped to weather the recent global financial crisis in the short term, partly as a result of the efforts over the past few years to control the fiscal deficit, bring down debt ratios, and adopt internationally-accepted banking sector capital adequacy standards. The Philippine banking sector--which includes 80% of total financial system resources--had limited direct exposure to distressed financial institutions overseas, while conservative regulatory policies, including the prohibition of investments in structured products, shielded the insurance sector. Although direct exposure to problematic investments and financial institutions was limited, the impact of external shocks to longterm economic growth, poverty alleviation, employment, credit availability, and overall investment prospects remains a concern. Real year-on-year GDP growth slowed to 3.8% during 2008, and sputtered to 0.9% during 2009, though the economy showed clear signs of recovery in the first half of 2010, growing 7.9% year-on-year. Overseas workers¶ remittances increased at a slower 5.6% pace in 2009, down from the double-digit growth rates of previous years, but were nevertheless better than expectations and rose to $17.3 billion (nearly 11% of GDP), helping the economy avoid recession and supporting the balance of payments and international reserves. Government spending, a looser monetary policy, and a relatively resilient business process outsourcing industry also helped support the economy. Annual GDP growth averaged 4.3% under the Arroyo administration, but it will take a higher, sustained economic growth path--at least 7%-8% per year by most estimates--to make progress in poverty alleviation given the Philippines' annual population growth rate of 2.04%, one of the highest in Asia. The portion of the population living below the national poverty line increased from 30% to 33% between 2003 and 2006, equivalent to an additional 3.8 million poor Filipinos. The food, fuel, and global financial shocks and severe typhoon-related damages of 2008-2009 are expected to have pushed more Filipinos into poverty. Drought brought by the El Nino weather phenomenon reduced agricultural and hydroelectric production in late 2009 and early 2010. The Philippines¶ business process outsourcing (BPO) industry currently accounts for about 15% of the global outsourcing market and has been the fastest-growing segment of the Philippine economy. Although industry revenues slowed from 40% growth during 2006 and 2007, the BPO sector has been

5 billion). A narrower merchandise trade deficit.relatively resilient amid the global financial turmoil.5% of Philippine GDP)." Nine years after the Arroyo administration enacted legislation to rationalize the electric power sector. and a modest expansion in foreign direct investments improved sentiment toward the end of 2009.2 billion in 2009 (up 19% and equivalent to about 4.2% of GDP in 2007 and had hoped to balance the budget in 2008 but opted instead for measured deficit spending to help stimulate the economy and temper the adverse impact of global external shocks on the already high number of Filipinos struggling with poverty. the state-owned transmission company (Transco) has been privatized and 70% of total generating assets in Luzon and the Visayas have been sold. Recent passage of additional revenue-eroding measures threatens to reduce government revenues further. Legislation to address these deficiencies is pending in the Philippine Congress. targeted for . The national government's tax-to-GDP ratio increased from 13% in 2005 to 14.000. The balance of payments surplus widened from $89 million in 2008 to $5. it declined and stagnated at 14% in 2007 and 2008. Although there has been some improvement over the years. The Philippine Congress enacted an anti-money laundering law in September 2001 and followed through with amendments in March 2003 to address legal concerns posed by the Organization for Economic Cooperation and Development (OECD) Financial Action Task Force (FATF). BPO revenues. The Egmont Group.8% in 2009.S. In September 2010. The Philippine stock market index--which closed 2008 down more than 48% year-on-year--closed 2009 63% higher from end-2008. The national government worked to reduce its fiscal deficits for 5 consecutive years to 0. but the United States remains the Philippines' largest trading partner with $12. Gross international reserves rose to a new record high of nearly $45 billion as of end-2009.000 new jobs in 2009.2 times foreign debts maturing over the next 12 months. bringing total BPO employment as of end-2009 to more than 442. the international network of financial intelligence units. as a result.6 billion in two-way trade during 2009. Some of the more important concerns include the exclusion of casinos from the list of covered institutions and 2008 court rulings that inhibit and complicate investigations of fraud and corruption by prohibiting ex-parte inquiries regarding suspicious accounts. pulled down by a 22% year-on-year decline in electronics export revenues. The sector created about 70. the OECD upgraded the Philippines to its tax "white list. Exports contracted. The FATF Asia Pacific Group conducted a comprehensive peer review of the Philippines in September 2008. but this is not a sustainable revenue source.3% in 2006 after new tax measures went into effect. The government has used privatization receipts to reduce the shortfall in targeted tax collections. admitted the Philippines to its membership in June 2005. and declined further to 12.e. Total U.8% year-on-year. merchandise exports--which rely heavily on electronics shipments for more than 60% of sales--declined by nearly 22% year-on-year during 2009. The Philippines has taken steps to adopt Internationally Agreed Tax Standards (IATS) and has implemented legislation that allows and provides a framework for the exchange of tax-related information.. higher overseas remittances.5 billion trade deficit relative to 2008 ($7. resulting in a narrower $4. low relative to historical performance (i. but imports also dropped 20% year-on-year. This has triggered the opening of access to retail competition in the electric power sector. adequate for about 9 months of goods and services imports and equivalent to 4. Although showing signs of recovering.9% of GDP. generating more than $6 billion in revenues in 2008 (up 26%) and $7. however. following the overall decline in global trade flows. the debt of the national government has declined to about 58% of GDP (from a 2004 peak of 78% of GDP).Philippines bilateral trade contracted from $17 billion in 2008. and is among the largest investors with $6 billion in total direct investments. Further reforms are needed to ease fiscal pressures from large losses being sustained by a number of government-owned firms and to control and manage contingent liabilities. the local value added of electronics exports remains relatively low. The national government ended 2008 and 2009 with deficits equivalent to 0.9% and 3.3 billion in 2009. Although still relatively high. The Philippine peso closed 2009 up 2. What remains for privatization is to transfer contracts of the National Power Corporation¶s (NPC) Independent Power Producers (IPPs) to private IPP administrators. and the consolidated public sector debt has declined to about 75% of GDP (from a 2003 peak of 118% of GDP). The current medium-term goal is to reduce the deficit to 2% of GDP by 2013. 1997¶s 17% peak ratio) and regional standards. respectively.

fertilizers. Trade Representative removed the Philippines from its Special 301 Priority Watch List in 2006. to lower costs of doing business. wood and wood products. and has only weak linkages to the rural economy. transport equipment. Notwithstanding good prospects for marine fisheries.S. the agricultural sector¶s slow growth of 3. intensifying competition and the emergence of powerful regional economies also pose challenges. although significant strides have been made in addressing . beverages.1% in real terms during 2009. and government policies have limited productivity gains. Philippine farms produce food crops for domestic consumption and cash crops for export. tobacco. Continuing efforts to fast-track power sector privatization remain critical to the long-term stability of public sector finances. clothing and footwear. and communication have so far inhibited faster industrial growth. offsetting the recovery of the livestock sector and gains from the fisheries and poultry sectors. particularly production of semiconductors and other intermediate goods for incorporation into consumer electronics are important components of Philippine exports and are located in special export processing zones. The sector grew only 0. ensuring reliable electricity supply. deforestation remains a severe problem. With its 7. and the central and southern regions still suffer from inadequate and unreliable generating capacity. industrial chemicals. Although the government has instituted conservation programs. The industrial sector is concentrated in urban areas. however. Agriculture and Forestry Arable farmland comprises more than 40% of the total land area. and electronics.9% was attributed to the negative growth in the livestock sector and lesser output in the crops and fisheries subsector. low economies of scale. iron and steel. dragged down by a 2. Agriculture generally suffers from low productivity. rubber and plastic products. remain concerned about law and order. small appliances. Sustained effort and continuing progress on key IPR issues. as well as tourists. Decades of uncontrolled logging and slash-and-burn agriculture in marginal upland areas have stripped forests. transportation. Newer industries. furniture and fixtures.4% from 2008. It maintained the Philippines on the Special 301 Watch List through 2010. and to promote good public and private sector governance. The agricultural sector employs more than one-third of the work force but provides less than a fifth of GDP.8% decline in the fourth quarter because of the adverse effects of successive strong typhoons. especially in the metropolitan Manila region. and inadequate infrastructure support. a lack of funds. machinery and equipment. textiles and textile products. Heavier industries are dominated by the production of cement. Potential foreign investors. with critical implications for the ecological balance. fabricated metal products.107 islands. leather products. Industry Industrial production is centered on the processing and assembly operations of the following: food. The U. inadequate infrastructure. the Philippines owns a diverse range of fishing areas. and inadequate government support. the industry continues to face a difficult future due to destructive fishing methods. and governance issues. lack of financing. Although the Philippines is rich in agricultural potential. paper and paper products. reflecting improvement in its enforcement of intellectual property rights (IPR) protection. printing and publishing. Electricity is still relatively expensive in the Philippines. inadequate infrastructure. and refined petroleum products. and bringing down the cost of power.completion in 2010. In 2008. pharmaceuticals. The crops sector (which contributes over 45% of total agricultural production) contracted by 1. policy and regulatory instability. glass and glass products. A Renewable Energy Act passed in 2008 has provided additional incentives for investment in this sector. While trade liberalization presents significant opportunities. Competition from other economies for investment underlines the need for sustained progress on structural reforms to remove bottlenecks to growth. mineral products. Philippines anti-corruption efforts are ineffective and more needs to be done to improve its international image--an effort that will require strong political will. paints. will be essential to maintain this status. Inadequate infrastructure.

gold. hydrocarbon products. Oil and gas price hike in the world market that permits increase in our daily cost of living. Industry: Types--textiles and garments. machinery and equipment. Patricia De Leon quoted below: ³The Philippines on a roll. mangoes. and phosphate. transport equipment. marble. sugar. GDP per capita (2009): $1. The discovery of natural gas reserves off Palawan has been brought on-line to generate electricity. exchange and consumption of goods and services. cobalt. Based on the article posted thru GMA.v by Ms.1 For the past decades. I should say for the year 2007 the economy is picking up ± it is growing. We may add the political turmoil that plagues our government ever since. with untapped mineral wealth estimated at more than $840 billion. This has also been a part of debates from all walks of life. tobacco products. A December 2004 Supreme Court decision upheld the constitutionality of the 1995 Mining Act.9% at constant prices. distribution. coal. mineral products. pineapple products. Agriculture: Products--rice.T. and utilization of minerals. silica. GDP (2009): $160. gypsum. and chromate deposits are among the largest in the world. oil. development.8 billion. iron. and lack of investment in infrastructure have contributed to the industry's overall decline. food processing. high production costs.the last of these elements. and sulfur. limestone.3 billion. coconut products. Presidents of the country from Former President Corazon Aquino to President Fidel V. aquaculture. It is a struggle and challenge to the president serving the country. Trade (2009): Exports--$38. Low metal prices. paper and paper products. pork. Imports--$42. pharmaceuticals. chemicals. corn. The Philippines also has significant deposits of clay. bananas. The Present Philippine Economic Condition August 21. fishing.746. beverage manufacturing. gold. Ramos to media frenzy ousted President Joseph Estrada and now the incumbent President Gloria Macapagal Arroyo for which all presidents made mentioned in their State of the Nation Address (SONA) the country¶s economic growth. Philippine copper. Despite its rich mineral deposits. Mining The Philippines is one of the world's most highly mineralized countries. In spite of all the things have been said and on what¶s happening around us. electronics and semiconductor assembly. Is the Economy Growing or Groaning? The Economy of the country has always been a struggle. nickel. . Other important minerals include nickel. wood products. eggs. and gas. business process outsourcing services. silver. Natural resources: Copper. I made mention the fluctuation in the local currency with the high in prices of commodities and electric consumption. silver.´ President Arroyo said.6 billion. thereby allowing up to 100% foreign-owned companies to invest in large-scale exploration. the Philippine mining industry is just a fraction of what it was in the 1970s and 1980s when the country ranked among the ten leading gold and copper producers worldwide. Annual GDP growth rate (2009): 0. 2007 in Labor and Economy GRACEY CORIAGE Economy Refers to the human activities related with the production.

´ that means. (GDP ± is one of the ways for measuring the size of its economy. BPO and many outsourcing companies that will provide employment to fresh graduates and also to underemployment Filipinos.wikipedia. 4.asp .com. which rose to a 17-year high at 6.wikipedia. ³Stock market is an important component of the ³leading economic indicators. BSP reported that lending to the wholesale and retail trade sector as well as the transportation. The facts show that. infrastructure. On the expenditure side.gov.2 percent in agriculture. storage and communications sector grew by 14. The increase in Gross Domestic Product Of 6. We have also gained from the tripling of investments in economic zones and priority sectors. Fishery and Private Services. Agriculture. main growth drivers were higher household spending. Filipino doctors have reasons to stay and work in the country¶s private and public hospitals.businessmirror.org/wiki/Economy http://www.´ This migration really has to stop.org/wiki/Economy http://en. One factor is the increase in bank lending this also means that there is economic activity going on. It is a sign that the country is slowly but surely rising up for the first time in at least a decade.³This is the fastest phase in almost two decades. 9. This investment will be in a form of rising job opportunities in the service sector specifically call centers.4 These results to more investments. Manufacturing. OFW remittances contribute in the surge of the peso as well. The GDP of a country is defined as the market value of all final goods and services produced within a country in a given period of time.3 percent each. and government consumption. will help encourage Filipino doctors not to try out working overseas. To end such a very Challenging piece of point view ± Is it good or bad? The answer is the former and not the latter.´ the BSP said. In addition to that. what happens in the stock exchange becomes clearly evident in economic numbers several months down the road.9 percent in the first quarter of 2007. The change the Philippines are experiencing right now in terms of economic growth is a good sign. According to Health Secretary Francisco Duque III he said that ³the continued growth of the country¶s domestic product (GDP).nscb.3 True to the fact that Stock market has the numbers to show. The exchange rate of the Peso versus the dollar at 46. If again the trend in the economy will continue and will be sturdy for the rest of the year this will also prevent migration of Doctors and Nurses. The return of investment in terms of revenues will benefit both parties and will provide jobs to unemployed Filipino through out the archipelago.2 Based on the article that I read which tackles about the flight of the Peso in the Market (Philippine Stock Exchange). ³The rising volume of funds being channeled to the services sector reflects the evolving structure of economic activity which has increasingly relied on services as a key driver for growth. Further more another domino effect in terms of the flight of peso in the stock market will be in a form of roll backs in price hikes as well as decrease in prices in commodities.9% for the first quarter indicates that the Philippines are really picking its way up.ph/sna/2007/1stQ2007/2007qpr1. 1 2 3 4 http://en. 5. Because of these developments we can convince our health practitioners and other Filipinos who wants to work aboard is to just stay here and serve our people and to promote the sense of patriotism.3 percent in industries.´ she added.ph/06052007/opinion02. jobs and it will also enable Filipinos to alleviate their standards of living.´ Pro administration and the Opposition like wise as to say on the recent development in the Philippine Economy. If the trend will continue for the succeeding months Filipino people through out the country will now have the capacity to save more and a lot such expenses to other things. exports of goods and services.1 percent growth in services. High Economic growth was basically a shocked to all of us.010 made way for the Influx of foreign investors to the country to try again and invest for believing in the confidence of the economy. The Growth was back up by the strong performances of Trade. The recent positive outcome I heard over the news the other day is that Manila Water Works will lower the rate in consumption effective July 1.html http://www.

The closure of an exhibition only achieved the closure of democratic. such informed and engaged discussions cannot take place and so many important ideas are consequently repressed. Such a violent escalation could. not only in guarding artistic freedom but also in ensuring a safe haven where artists as public intellectuals have the freedom to exhibit. in turn. it is protected as expression in a free society. students of art and the public by no means homogenous to come together and raise and address issues in an atmosphere conducive to forming a community of critical audiences of art. and hone our visual competencies and literacy.´ With both sides mobilizing their supporters for huge demonstrations. The work in question is art. While freedom of expression and artistic license are not absolute and must be guided with reflexivity. educators. We sadly observe that the issue has been reduced to the level of polemics. thus far. It must take the lead. urge the Cultural Center of the Philippines (CCP) to reopen the exhibition Kulo featuring 32 works from artists who contributed to the curatorial concept of revolutionary ferment in contemporary Philippine society as inspired by Dr. gain new knowledge and insights. Re-open the exhibition! Defend the freedom of expression! The Philippines¶ Prolonged Political Crisis By Ronald Meinardus If there is one ray of light in the protracted political turmoil besetting the Philippines it is that. even a minor incident could turn into a full blown vicious outburst. grandstanding and shouting matches over the more vital meaning of art and what role artists play in contemporary times. policymakers. and while it is a site of struggle over meanings and definitions. the freedom is fundamental. become the pretext for the military to step in and restore ³law and order.´ This. the ethical course of action is to process the contentions and that is what art ensures: a process of communicative action. and inalienable. informed and thoughtful engagement. No to Censorship! We. but it would be more productive for us to bring the discussion in a well-informed manner. faculty members of the Department of Art Studies. Why for instance do images have the power to offend and provoke an excess of emotion and action? Now. and without benefit of proper framing and venue. who told foreign correspondents that we are³one notch short of getting violent. We educators will rally behind a cultural institution that will provide the venue and platform for artists. Jose Rizal s life and ideals. without the artworks to look at and experience in actuality. While there are contending interpretations of an image presented by art. I hasten to . reclaim and maintain its autonomy.Kristian Sendon Cordero Statement on the Closure of the Kulo Exhibit at the CCP by the Department of Art Studies. University of the Philippines in Diliman. The CCP should protect its mandate. to study and discuss our own responses and in the process. accountability and responsibility on the part of makers of art. Just how tense things have become is reflected in a recent statement of a close advisor to beleagueredPresident Gloria Macapagal-Arroyo. It may violate and offend community and common standards of morality. UP Diliman 13 August 2011 No to Closure. the situation has remained peaceful.

as it is constitutional. Today. The president herself came out with . gives the accused president a chance to defend herself. and even families are divided. Arguably. when massive demonstrations led to the downfall of presidents considered unfit to run the nation by major sectors of society. When the Social Weather Stations (SWS) published its findings. Arroyo will never resign. One and a half months after audio tapes surfaced allegedly showing Mrs. Equally newsworthy I found the result that only two individuals out of more than 500 respondents opted for ³people power. Still. In both people power uprisings (as they have come to be known) the Roman Catholic hierarchy and eventually also the armed forces joined the movement thereby tipping the balance in favor of the demonstrators.add. her opponents claim she has lost themoral and the political authority to govern. and empirical data justifies their claim. the local media focused on the falling trust ratings of the president. Mrs. the political crisis in the Philippines has entered a new stage. voices of compromise are scarce ± and hardly heard. officials in government. that their situation has worsened. Many would even say. the neutrality of two key players blew new life into the besieged presidency. two defining dates in Philippine history. Her supporters will argue that while speaking to an official of the Commission of Elections (Comelec) may be morally objectionable. Filipinos seem to have learned their lesson. from where ideally it should never have left in the first place. The fact that it is hardly debated publicly may indicate that it is not considered a likely development. ³There has been no candidate who hasn¶t called the Comelec to ensure that his votes didn¶t disappear during the counting or in transport. the business community. There is a general feeling that the country has entered a period of a drawn out political stalemate.´ said a former member of the Arroyo cabinet who resigned recently. teachers. The people¶s passivity challenges the widespread perception that in the end of the day the masses will take their destiny into their own hands. How one perceives the president has become the single most important issue. many public debates focus on the question why the present situation is different from 1986 and 2001. the opposition seems willing to impeach the president. transcending established ideological and partisan allegiances. makes an amicable solution difficult and improbable. the political crisis is far from settled. too. With more or less all major political forces having opted for one or the other camp.´ There are indications that the political conflict will return to the halls of Congress. It may be expected that the president will repeat her claim that she did nothing illegal or even criminal. ³Churches. it is a common practice in this land. the most important difference today is that the public has shown little if any inclination to go to the streets in large numbers. students. Following initial hesitation. While friends and foes of Mrs. they agree that the current political system is in dire need of radical reform. men in uniform. Arroyo will probably always disagree who should lead this country. Considering the very negative mood earlier. is a worst case scenario. and importantly.´ wrote a commentator who is known for her support of the president. This. given the amount of cheating that goes on during every election. Philippine politics is extremely polarized. While the supporters of the president maintain Mrs. this people power fatigue is a painful disappointment. Arroyo¶s position was stabilized when the Roman Catholic hierarchy publicly stated it would not join the clamor and the military also refrained from getting involved. While in the early weeks of the turmoil the political momentum for the president to resign grew. Arroyo cheated her way into office. For many left leaning Filipino intellectuals who tend to idealize the popular protests of the past. Once more. A recent opinion poll conducted by a reputable survey institute revealed how fed-up the people are with being sent to the streets by political agitators. This is a reasonable option. Few would argue today that the two previous revolts led to an improvement of the quality of their lives.

the revealing and also incriminating remark that ³our political system has degenerated to such an extent that it is very difficult to move within the system with hands totally untainted.´ In the midst of the crisis. Send comments to liberal@philippines. Considering the seriousness of the endeavor. As long as major political players question the legitimacy of the president. the political stalemate in the Philippines will continue. July 19. A consensus is evolving that the Philippines is in need of a new constitution.fnst. One condition for constitutional change is a basic consensus among the major political forces. 2005 .org © BusinessWorld. various political sectors have come out with proposals aimed at remedying the situation. One influential proponent even suggests that the new constitution should be ready as soon as next February so that the people may decide on it in a plebiscite. The assumption that this consensus may be achieved any time soon is wishful thinking. At the same time this hurriedness is unrealistic. Among the formulas proposed is to transform the present presidential system to a parliamentary and federal form of government. Ronald Meinardus was the former Resident Representative of the Friedrich Naumann Foundation in the Philippines and a commentator on Asian affairs. any such haste seems inappropriate. Dr.

Sign up to vote on this title
UsefulNot useful