Philippines Economic Structure

March 29, 2010Philippinesby EconomyWatch Content

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As a newly industrialized economy, the Philippines is shifting from an agriculture based economy to one which more manufacturing and services dominant. Since 2004, under then President Gloria Arroyo's administration strive towards economic growth of the country, and become one of the growing economies in Southeast Asia. Today, Philippines is the 33rd largest economy in the world, and will be the 14th largest in 2050, according to Goldman Sachs.

Since 2001, Philippines experience rapid economic that averaged 4.5 percent annually, the highest in over 30 years. In real terms, the economy has expanded by 47.2 percent over 9 years. However, strong economic growth does not bring better social well-being to the Filipinos. High unemployment rate and rising poverty made Filipinos worse off than when their economy began growing in 2001.

Philippines is a member of world organizations like APEC, ASEAN and WTO. The country has opened up its economy and built an extensive network of free trade agreements with different countries, to promote free trade and investment flows.

Economic Geography

Philippines covers a total area of 300,000 square km. With 19 percent of arable land, agriculture in Philippines is one of the leading exporters of crops such as abaca, bananas, carrageenan, copra (and other coconut products) and pineapples. In 2010, Philippines is also the world's largest exporter of rice.

Philippines is also rich in mineral and natural resources. It is estimated that the country is worth $1 trillion in mineral wealth, making them as one of the largest mining countries in the world. Philippines also holds important natural resources such as nickel, silver, coal, gypsum and sulfur. The mining industry sees a decline until 2004, when the government reverse a law and fully allow foreign companies to invest in the exploration and development of the mining fields in the country.

Population and Labour Force

Philippines has a population of 101.83 million people, and is the 12th largest country in the world in terms of population size. It has a labour force of 38.9 million workers. In 2010, the unemployment rate is 7.2 percent.

High employment is an ongoing problem in Philippines, and averaged 11.2 percent during the economic progress from 2001 to 2009, under then President Gloria Arroyo's administration when the country is undergoing rapid economic development. Low wages and rising standards of living have also forced thousands of Filipinos leaving the country everyday to seek better job prospects in neighboring countries.

Currently, there are more the 5 million Filipinos living outside the Philippines.The large number of overseas workers also generate huge amount of remittance that were sent back to their homeland every year. In 2010, total remittance amounts to US$18.7 billion, which accounts for 10 percent of the country's total GDP.

Industry Sectors

In 2010, industry  was responsible for 31.3 percent of Philippines' GDP. Major industries include automotive, electronics, textiles, and food processing. Industry also employs 15 percent of the total workforce.

Philippines is the home to many major car manufacturers, such as Mercedes-Benz, BMW, Volvo, Ford, Toyota, Mitsubishi and Nissan, with Toyota the biggest seller of vehicles in the country. The automotive market in Philippines saw a 14-year decline in sales until 2010, when demand rises and set a new record high of 162,000 cars sold that year.

Electronics also played a huge role in Philippines industry. Major electronics manufactures like Intel and Texas Instruments have established their operations in the country for over two decades. Electronics in Philippines produce 10 percent of the world's supply of semiconductor manufacturing services and 50 percent of the world's production of HD TVs.

Philippines is also a leading export market for textiles, along with the US, Japan, Great Britain, Germany and Canada. Textiles exports contributes 4.93 percent of the country's total exports volume. Philippines' availability to textile resources such as natural fiber and natural dye, combined with a skilled and creative labour force allows the country to stay competitive in the textile market in the world.

Services in Philippines contributes 54.8 percent of the country's total GDP, and is estimated to grow further as part of its economic development plan. In 2010, it employs 52 percent of the total workforce.

Business process outsourcing(BPO) is the biggest driving factor behind Philippines' growing services. As of 2010, Philippines has overtaken India as the world leader in business support functions, according to a IBM Global Location Trends Annual Report. The country's BPO market makes up 15 percent of the world's outsourcing market. BPO has contributed US$6 billion in revenues for the Philippines economy in 2008, US$7.2 billion in 2009, and US$9 billion in 2010. Currently, there are about 525,000 workers in the BPO market.

 

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