In the East Asia Pacific region, the Philippines has been named one of the most dynamic economies. With its increased average annual growth from an average of 4.5% between 2000-2009 to 6.4% between 2010-2019, clearly, the Philippine economy is flourishing.
To add more, the dynamism of the Philippine economy is rooted in the formidable consumer demand backed by a vibrant labor market and robust remittances from the OFWs. Overseas Filipino Workers or OFWs are considered the country’s modern-day heroes because of their help in keeping the economy afloat with their contribution through their remittances. In fact, it hit an all-time high of $33.5B in 2019 alone and it accounted for at least 9.3 percent of our GDP– read more from OFWs and their impact on the Philippine Economy.
Business activities in the country are very optimistic with notable performance in different sectors, for instance in the services sector, you can observe that business process outsourcing, real estate, tourism, and finance and insurance industries are performing well. The large and young population, a growing middle class, as well as increasing urbanization, has made a significant impact on the Philippine economy. Moreover, the Philippine economy in 2015 has made great progress in decreasing the poverty rates through inclusive growth. Poverty rates have declined from 23.3% in 2015 to 16.6% in 2018.
However, in 2020, multiple events hit the Philippines, one of them, or perhaps the proximate cause, is the COVID-19 health crisis. Due to the imposition of lockdowns, restrictions on mobility, and other similar quarantine measures, a lot of economic activities across the country have halted. It was further aggravated by devastating typhoons in November and a global recession, which made the economy shrink in percentage rankings in 2020. The gains made in poverty reduction in recent years have been reversed involuntarily. Nevertheless, the country experienced a glimpse of economic recovery in 2021, when the borderlines of different countries had reopened, with easement of quarantine restrictions, and decreasing COVID-19 cases, the Philippines was seen to be on the way to economic recovery with its sustained improvements. However, there are still challenges to economic growth that the country will continue to face in the coming years as the threat of the pandemic has not yet ended. Hence, the government should implement key policies to protect the long-term fiscal sustainability, help leverage the private sector in the recovery, and limit the economic damage from the pandemic.
World Competitiveness Rankings
For this year’s ranking on the competitiveness of countries, using statistics and surveys based on extensive research by the Swiss-based International Institute for Management Development (IMD), Denmark has managed to be number one on the global rankings. The GDP figures are not enough to determine the country’s competitiveness. Government efficiency, economic performance, business efficiency, infrastructure projects, and social, political, and cultural aspects are some of the factors that determine also the ranking of a country’s World Competitiveness. The Philippines climbed into four spots in the rankings this year, ranking from the 52nd out of 64 countries in 2021, the Philippines has managed to rank 48th place out of 63 nations in 2022.
As can be read below, the country’s economic performance, starting with GDP, has expanded by 5.7% from last year. The GDP growth of 8.3% is said to be attributable to the transportation and storage industry, contributing to at least 26.5%, and to the manufacturing industry with 10.1 percent.
What is the ranking of the Philippines in terms of Nominal GDP
The Philippine economy is the world’s 32nd largest economy by nominal gross domestic product (GDP) corresponding to the International Monetary Fund 2021. Further, the country is said to be the 12th largest economy in Asia and the 3rd highest economy in the ASEAN following Indonesia and Thailand. As the Philippines is set to be one of the fastest-growing emerging markets, the GDP is expected to grow at the fastest pace in ASEAN this year. With the easing of Covid-19 restrictions, fiscal and monetary stances, and the government’s “Build, Build, Build” infrastructure program, these supports will definitely help the economy to boost. The government has allocated 981 billion pesos ($18.8 billion), or equal to 5% of GDP, for infrastructure projects this year.
Infrastructure projects create jobs that benefit the places where those infrastructures are built by giving opportunities for the residents to get jobs and make income out of them. Further, it is a great avenue for a country to stimulate the growth of its economy through the creation of jobs in infrastructure. Read more here from BRIA Homes– The Effect of New Infrastructures on the Economy and How Can It Provide Better Jobs for the Public.
Further, despite the omicron outbreak in January, the Philippine economy had still expanded by 8.3% in the first quarter of 2022 from a year earlier, despite the disruptions due to the pandemic, rising energy prices, and uncertainty from the war in Ukraine. These results could be attributed to the relaxation of pandemic restrictions which helped the consumption of goods by the consumers. The gross domestic product of the country grew faster than the previous quarter’s 7.8%, making a recovery from the first three months of 2021 when the economy contracted 3.8%. The growth during the first quarter of 2022 was attributable to the manufacturing, wholesale, and retail trade, automotive repairs, and transportation and storage. The consumption per household grew to about 10.1%, while the government expenditure rose to about 3.6%.
Philippine Economic Freedom
To answer the main title of this article, what is the ranking of the Philippines? The Philippine economy in terms of its economic freedom score is currently ranked 15th among 39 countries in the Asia–Pacific region, making its economy the 80th freest in the 2022 Index. The country has continued to experience a downfall in economic freedom, falling seven spots to 80th out of 177 economies in the 2022 global index with a score of 61.1. Because in the previous year’s index, the Philippines has ranked 73rd out of 178 economies.
The economic freedom score by the US-based think tank Heritage Foundation gauges the level to which individuals are allowed freely to pursue their own economic interests through the four factors of the economic and entrepreneurial environment, to which governments usually exercise policy control. The four factors are the open markets, rule of law, government size, and regulatory efficiency. Hence, on a scale from 0, one considered a repressed economy to 100 a free economy, the country’s economic freedom has fallen short by three points to 61.1 in the 2022 index. Nevertheless, the score is above the regional and global average scores of 58.5 and 60, respectively. Currently, the Philippines’ economic freedom is categorized as moderately free based on its 80th rank and score of 61.1. The world’s freest economy is recorded to be Singapore followed by Switzerland, Ireland, New Zealand, and Luxembourg. Quite the opposite is the country of North Korea, which is the least-free nation.
It was also observed that the Philippines has a weak infrastructure, shabby broadband, unaffordable power costs, and inconsistent rules and regulations, which can be seen as challenges to businesses. Further, the labor laws are often not complied with– the minimum wage, bonuses, and other contributions are often not followed by some business enterprises.