Emerging Markets: A Close Examination of the Philippines' GDP
Despite rapid economic growth since the 2000s, the Philippines remains a developing country with a lower per-capita income compared to developed nations. The economy is heavily dependent on services, constituting over 61% of its GDP. Additionally, remittances from Filipino workers overseas now contribute approximately 10% to the country's overall GDP.
Basics
In a transformative trajectory led by President Benigno Aquino III and continued by Rodrigo Duterte, the Philippines has embarked on a journey of ascension akin to a burgeoning tiger. This noteworthy transition was accentuated by Motoo Konishi, the World Bank Country Director, during the 2013 Philippines Development Forum.
The convergence of ethical governance, committed leadership, burgeoning infrastructure, and strategic policy initiatives has propelled the Philippines onto a trajectory of accelerated advancement. However, analogous to all evolving economies, the comprehensive dissemination of progress is yet to attain its full impetus. Pressing social issues such as poverty, inequality, and joblessness require immediate and genuine attention. The forthcoming prospects shimmer with optimism, given the Philippines' burgeoning and English-speaking youthful workforce, substantial international remittances, and notably modest household debt within the Asian context.
While the Philippine economy maintained a measured momentum until the threshold of the 21st century, the subsequent two decades have witnessed profound economic expansion. Averaging at an annual growth rate of 4.6% during the decade spanning 2000 to 2009, the economy catapulted to a robust 6.4% between 2010 and 2019. This remarkable trajectory has propelled the nation's metamorphosis from a lower middle-income entity, characterized by a gross national income per capita of under $1,000 before the turn of the millennium, to an impressive $3,160 as of 2021.
Transformation of the Agricultural Landscape in the Philippines
Diverse sectors, including agriculture, industry, and services, make up the complex structure of a country's GDP. Notably, in 2021, agriculture's GDP share rested at approximately 10%, marking a historic low for the country. A retrospective lens reveals a stark contrast, with agriculture commanding a quarter of GDP in the 1980s and nearly a third in the 1970s. On parallel fronts, industries constituted 30.8%, while services surged to 60%. It merits mention that industrial outputs have witnessed a steady decline, even as the service domain experienced a pronounced ascension.
An evolution from agrarian foundations to a service and industry-driven economy has gradually unfolded in the Philippines. In 1980, agriculture held sway over a quarter of the GDP, a dominance that has waned to 9.3% over time. This agricultural sphere encompasses forestry, hunting, fishing, crop cultivation, and livestock breeding while embracing a quarter of the labor force. Noteworthy harvests comprise sugarcane, coconuts, rice, corn, bananas, cassava, tapioca, pineapples, mangoes, pork, eggs, beef, and fish.
Persistent lethargy in productivity growth within the agricultural domain has forged a nexus with heightened poverty rates. Inadequate governmental endeavors have emerged as the primary catalyst for this sector's decline, compounded by feeble infrastructural foundations and minimal investment inflow. These challenges found amplification amid prolonged drought episodes.
The horizon, however, casts a different hue as governmental focus takes a pivotal turn towards revitalization. A weighty influx of investments permeates this sector, fortified by resolute support for the Department of Agriculture's (DA) initiatives. Objectives orbiting food security, rural income augmentation, and infrastructure enhancement commandeer this drive. DA has implemented Farm Mechanization, National Organic Agriculture, and Post-Harvest Development to reduce post-harvest losses, increase affordability, and stabilize labor expenses.
The Philippine Rural Development Project, bolstered by World Bank patronage, unfurls its mission to enhance rural infrastructure. Concurrently, the swift expansion of the crop insurance blueprint, orchestrated by the Philippine Crop Insurance Corporation and endorsed by the government, promises comprehensive coverage against climatic adversities.
Embedded within these stratagems and more lies the promise of an imminent agricultural resurgence. The Philippines stands poised for a revival in productivity and yield, poised to script a new narrative for its agrarian expanse.
Industrial Evolution: Philippines' Sectoral Dynamics
A substantial and consistent imprint on the Philippines' GDP has been etched by its industrial sector, ranging from a zenith of nearly 45% during the 1980s to a nadir beneath 28% in 2021. This sector remains an employer for almost a fifth of the national workforce. Bolstering infrastructure to court foreign direct investment (FDI) becomes a central government pursuit, fostering the emergence of economic zones that have magnetized foreign enterprises. There are indications that some companies are contemplating a shift from their traditional base in China to the Philippines and neighboring Southeast Asian nations, a strategic migration poised to nurture industrial sector expansion in forthcoming years.
The Philippine industrial tapestry is woven with two predominant threads: manufacturing and agribusiness. Manufacturing embraces the tapestry of mining and mineral processing, pharmaceuticals, shipbuilding, electronics, and semiconductors. Notably, the Philippines boasts a compelling pharmaceutical landscape, garnering recognition as a prized hub in Asia-Pacific. Furthermore, metallic resources have beckoned foreign entities, including giants such as BHP and Sumitomo Metal Mining Co Ltd. This amalgamation has synergistically fueled the nation's shipbuilding potential, situating it as the fourth-largest maritime entity globally (surpassed only by China, South Korea, and Japan).
The Philippines' electronic journey commenced in the mid-1970s, marked by Western corporations diversifying their production footprint to counteract escalating production costs. Since then, the electronic sector has burgeoned, fostering an integral role within the nation's economic framework—contributing to job creation, fiscal revenue, exports, household earnings, and GDP proportion.
The agribusiness industry focuses on processed produce such as fruits, vegetables, tropical fruits, and seaweed. Amid this mosaic, the freshest tropical fruits, mango seed oil, sugar plantation, bioethanol, biofuels, and coco methyl ester find their niche, encapsulating the diversity of this sector's fabric.
Service Landscape: Philippines' Sectoral Dynamics
During the early 1980s, a pivotal transformation unfurled within the Philippines' economic fabric as the service sector eclipsed the industrial realm in terms of GDP contribution. This ascendancy burgeoned from 36% in 1980 to surpassing 60% in 2020. A parallel narrative unfolds in workforce alignment, with the services sector absorbing an equivalent contingent, an amalgamation surpassing the combined might of agriculture and industry.
Embedded within the service sector's tapestry, business process outsourcing (BPO) emerges as a linchpin of progress. The Philippines' BPO sector flourishes on the foundation of multilingual professionals, underscored by a cultural affinity for U.S. norms—wherein the Philippines stands as the largest BPO market. The industry's surge harmonizes with a customer-centric professionalism that underpins this domain.
Tourism, the second significant brushstroke, imprints the service sector with a legacy of steady expansion. Despite this, the Philippines' tourism prowess remains untapped, trailing regional counterparts like Singapore, Indonesia, and Thailand. Constrained by inadequate infrastructure, encompassing airports, underdeveloped rail and road networks, and deficient tourist amenities, the sector confronts obstacles that hinder its potential.
The mosaic deepens with export services, encapsulating the contributions of the Filipino diaspora, spanning permanent, temporary, and intermittent migrants. Over the years, overseas Filipino remittances have surged, culminating in a robust 10% of GDP. This crescendo burgeoned from 8.5% in 2000, 3.3% in 1990, and meager 1.93% in 1980. As the BPO bastion expands, a ripple effect permeates consumer spending and job creation, nourished by formidable foreign earnings. This trajectory steers the nation toward a viable alternative, fortifying the economic landscape.
As the BPO arena amplifies its footprint and proffers growth vistas, it proffers dual dividends. Beyond bolstering the service sector's tapestry, it beckons compatriots homeward, curbing the peril of dwindling overseas remittances.
Conclusion
A balanced partnership between agriculture, industry, and services drives an economy forward. This stability provides the groundwork for further advancements in tertiary sectors. In the past, the Philippines lagged behind its wealthier Southeast Asian and East Asian counterparts regarding economic and social progress. However, those times are now behind us. Today, the Philippines is steadily progressing towards growth and long-lasting sustainability.