The Economy of the Philippines is a capitalist market economy in Asia, and one of the newly industrialized emerging market economies of the world. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. The United States dollar ( sign: $; code: USD) is the unit of Currency of the United States; it has also been Capitalism is the Economic system in which the Means of production are owned by private Persons and operated for Profit and where A market economy is a realized Social system based on the Division of labour in which the prices of Goods and Services are determined in a The category of newly industrialized country ( NIC) is a socioeconomic classification applied to several countries around the world by Political scientists The term emerging markets is used to describe a nation's social or business activity in the process of rapid Industrialization. In 2007, it was ranked as the 37th largest economy by the International Monetary Fund according to purchasing power parity. Year 2007 ( MMVII) was a Common year starting on Monday of the Gregorian calendar in the 21st century. There are three lists of Countries of the world sorted by their Gross domestic product (GDP (the value of all final goods and services produced within a nation The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic The purchasing power parity ( PPP) theory uses the long-term equilibrium Exchange rate of two currencies to equalize their Purchasing power. It is the fastest-growing economy in Southeast Asia, posting a real GDP growth rate of 7. 3% in the year 2007, its fastest pace in three decades and has been compared to the economy of India in its sudden and rapid growth. The economy of India, measured in USD exchange-rate terms is the twelfth largest in the world with a GDP of around $1 trillion (2008 ^[1]

Important sectors of the Philippine economy include agriculture and industry, particularly food processing, textiles and garments, and electronics and automobile parts. Most industries are concentrated in the urban areas around metropolitan Manila, while metropolitan Cebu is also becoming an attraction for foreign and local investors in recent dates. The City of Manila Cebu is one of the Provinces of the Philippines. It lies to the east of Negros Island; to the west of Leyte and to the southeast is Bohol Mining also has great potential in the Philippines, which possesses significant reserves of chromite, nickel, and copper. Recent natural gas finds off the islands of Palawan add to the country's substantial geothermal, hydro, and coal energy reserves. Palawan is an Island province of the Philippines located in the MIMAROPA region.

History

Since the end of World War II, the Philippine economy has had a very turbulent history. World War II, or the Second World War, (often abbreviated WWII) was a global military conflict which involved a majority of the world's nations, including Immediately after the World War II, the Philippines was a fast growing economy and was one of the richest countries in Asia (following Japan), and in the 1960s it looked to become one of Asia's superpowers. For a topic outline on this subject see List of basic Japan topics. The 1960s decade refers to the years from the beginning of 1960 to the end of 1969

However, during the regime of Ferdinand Marcos, the economy declined dramatically in growth and productivity as it was destabilized by corruption as he embezzled billions of dollars from the national treasury. Ferdinand Emmanuel Edralín Marcos ( September 11, 1917 &ndash September 28, 1989) was President of the Philippines from 1965 to 1986 By the time of the People Power revolution, the economy had declined, falling severely below the growth of other nations in Southeast Asia. A severe recession in 1984-85 saw the economy shrink by more than 10%, and perceptions of political instability during the Aquino administration further damped economic activity. During this time, capitalism became highly prevalent in the nation, as major American corporations dominated local industry alongside a few local entrepreneurs. Fidel Ramos managed to briefly stimulate the economy during his reign as president, posting one of the Philippines' highest GDP growth rates. Fidel Valdez Ramos (born March 18, 1928) was the 12th President of the Philippines. The country, however, could not recover entirely from the economic slowdown in the Marcos regime.

In 1998, the Philippine economy deteriorated again as a result of spill over from the Asian financial crisis and poor weather conditions. The Asian Financial Crisis was a period of Financial crisis that gripped much of Asia beginning in July 1997 and raised fears of a worldwide economic meltdown ( Growth fell to about -0. 6% in 1998 from 5. 2% in 1997, but recovered to 3. 4% by 1999. President Estrada attempted to resist protectionist measures, and efforts to continue the reforms begun by the Ramos administration made significant progress. A major wank failure in April 2000 and the impeachment and subsequent departure of President Estrada in the beginning of 2001 led to lower growth.

The current administration under President Gloria Macapagal-Arroyo has been symbolized by radical and risky moves pushing towards faster and more rapid economic growth. Maria Gloria Macapagal-Arroyo (born Maria Gloria Macaraeg Macapagal on April 5 1947 is a Filipina Politician. In recent years, Arroyo's stance towards economic improvement since 2004 have seen the Philippines re-emerge as one of the growing economies in Southeast Asia. In 2004, the Philippine economy grew by 6. 1%, beating most analysts and even the government's estimates. In 2005, the Philippine Peso posted an appreciation rate of 6%--the fastest in the Asian region for that year. The peso ( Filipino: piso) ( sign: ₱; code: PHP) is the currency of the Philippines. However, the advent of high oil prices damped the government's growth estimates for that same year as growth only amounted to 5. 1%. During 2006, the economy posted a 5. 4% growth, damped by two typhoons which wreaked havoc on the agricultural sector. The government plans to bolster infrastructure spending in 2007 tenfold, and is targeting an accelerated growth of the economy by 7% in 2007, 8% in 2008, and 9% in 2009 well as improved domestic improvement. President Arroyo had visioned that by 2020 the Philippines would be a First World country.

The local stock market hit a record high in June 1, 2007 while the peso is trading at around the PHP41 level to a US dollar and is currently PHP40. 50 as of January 14, 2008, making it Asia's best performing currency so far by sharply appreciating nearly 19%. [4].

On January 31, 2008, Philippine 2007 GDP grew 7. Events 1504 - France cedes Naples to Aragon. 1606 - Gunpowder Plot: Guy Fawkes 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common The Philippines ( Filipino: Pilipinas, officially known as the Republic of the Philippines (fil ''Republika ng Pilipinas'' RP 3%, the fastest in 31 years: its economy grew seasonally adjusted 1. An economy is the realized social system of production exchange distribution and consumption of goods and services of a country or other area 8%, faster than expected in the 4th quarter while inflation was tamed at 2. 8% amidst sharp increases in oil prices; Frederic Neumann, HSBC economist stated that: "Evidently economic momentum is very strong, therefore if we see a slowdown in economic growth, it would only materialise in the second half of the year. HSBC Holdings plc ( (,,,) is a Public limited company incorporated in England and Wales, headquartered in London. We therefore see a reduced need for the central bank to cut rates aggressively now and we might see that today with a 25 basis point cut. "^[2]

Macro-economic trend

This is a chart of trend of gross domestic product of Philippines at market prices estimated by the International Monetary Fund with figures in millions of Philippine pesos. The peso ( Filipino: piso) ( sign: ₱; code: PHP) is the currency of the Philippines. ^[3]

The Philippine Stock Exchange center at Ayala Avenue, Makati, Metro Manila

Sectors

The heart of the Makati Central Business District, the biggest in the Philippines

As a newly industrialized nation, the Philippines is still an economy with a large agricultural sector, however services are beginning to dominate. The City of Makati, or simply Much of the industrial sector is based around manufacturing electronics and other high-tech components, usually from American corporations.

Industrial production is centered on processing and assembly operations of the following: food, beverages, tobacco, rubber products, textiles, clothing and footwear, pharmaceuticals, paints, plywood and veneer, paper and paper products, small appliances, and electronics. Heavier industries are dominated by the production of cement, glass, industrial chemicals, fertilizers, iron and steel, and refined petroleum products.

The industrial sector is concentrated in the urban areas, especially in the metropolitan Manila region and has only weak linkages to the rural economy. The City of Manila Inadequate infrastructure, transportation and communication have so far inhibited faster industrial growth.

Agriculture

Rice paddies are a common sight in the Philippines, the government has introduced new measures to increase its production yield to meet domestic demands

The Philippines currently hosts the International Rice Research Institute (IRRI), which studies high yielding rice varieties. Rice is a Cereal foodstuff which forms an important part of the diet of many people worldwide and as such it is a staple food for many The Philippines ( Filipino: Pilipinas, officially known as the Republic of the Philippines (fil ''Republika ng Pilipinas'' RP It has played a key role in the Green Revolution and was able to increase rice yields and rice production during the 1970s . The Green Revolution refers to the transformation of Agriculture that began in 1945 at the request of the Mexican government to establish an agricultural research station to ^[4]

Automotive

The ABS used in Mercedes-Benz, BMW, and Volvo cars are made in the Philippines. An anti-lock braking system, or ABS (from the German, A nti' b' lockier' s' ystem) is a safety system on Motor vehicles Mercedes-Benz is a German manufacturer of luxury Automobiles Buses coaches and Trucks It is currently a division of the ( BMW) (Bavarian Motor Works is an independent German automobile manufacturer founded in 1916 This article is about Volvo Group - AB Volvo Volvo Cars is the passenger vehicle maker owned by Ford Motor Company, using the Volvo Trademark 2005 was the first year that the Philippines exported cars in quantity courtesy of Ford Motor Company. Ford Motor Company is an American Multinational corporation and the world's fourth largest automaker based on Worldwide vehicle sales, following Toyota and Nissan are other major automakers that make cars in the country. (pronounced) is a Multinational corporation headquartered in Japan, and is currently the world's largest Automaker. Further investments in this sector are expected to grow in the next following years. ^[5]

Electronics

Filipino exports in 2006

Intel has been in the Philippines for 28 years as major producer of Intel's advanced products including the Pentium 4 processor. The Philippines ( Filipino: Pilipinas, officially known as the Republic of the Philippines (fil ''Republika ng Pilipinas'' RP The Pentium 4 brand refers to Intel 's line of single- core mainstream desktop and Laptop Central processing units (CPUs introduced A Texas Instruments plant in Baguio has been operating in for 20 years and is the largest producer of DSP chips in the world ^[6]. Texas Instruments ( better known in the electronics industry (and popularly as TI, is an American company based in Dallas, Texas, USA Geography The three main access roads leading to Baguio from the lowlands are Kennon Road, Marcos Highway A digital signal processor ( DSP or DSP micro) is a specialized Microprocessor designed specifically for Digital signal processing, generally TI's Baguio plant produces all the chips used in Nokia cell phones and 80% of chips used in Ericsson cell phones in the world. Nokia Corporation (pronunciation /'nɔkiɑ/),,) is a Finnish multinational Communications Corporation, headquartered Ericsson ( Telefonaktiebolaget L M Ericsson) () one of the largest Swedish companies is a leading provider of telecommunication and data communication systems Until 2005, Toshiba laptops were produced in Santa Rosa, Laguna. ( is a multinational conglomerate manufacturing company headquartered in Tokyo, Japan. The City of Santa Rosa (In Tagalog, Lungsod ng Santa Rosa) is a first class city in the province of Laguna Presently the Philippine plant's focus is in the production of HDD's. A hard disk drive ( HDD) commonly referred to as a hard drive, hard disk, or fixed disk drive, is a Non-volatile storage device Printer manufacturer Lexmark has a factory in Mactan Island in the Cebu region. Lexmark ( is an American Corporation which develops and manufactures printing and imaging solutions including laser and inkjet printers multifunction products ^[7]

Outsourcing

Velvet view of office buildings in Ortigas, one of the largest financial districts in Metro Manila

See main article: Business process outsourcing in the Philippines

The majority of the top ten BPO firms of the United States operate in the Philippines. Ortigas Center is the second most important commercial and business district (after Makati) in Metro Manila, Philippines. Business process outsourcing or BPO is an emerging industry in the Philippines. Business process outsourcing ( BPO) contains the transmission of processes along with the associated operational activities and responsibilities to a third party with at least The United States of America —commonly referred to as the Total jobs in the industry grew to 100,000 and total revenues are placed at $960 million for 2005.

Mining

The country is rich with mineral and thermal energy resources. In 2003, it produced 1931 MW of electricity from geothermal sources (27% of total electricity production), second only to the United States,^[8] and a recent discovery of natural gas reserves in the Malampaya Fields off the island of Palawan is already being used to generate electricity in three gas-powered plants. Palawan is an Island province of the Philippines located in the MIMAROPA region. Philippine gold, nickel, copper and chromite deposits are among the largest in the world. Other important minerals include silver, coal, gypsum, and sulfur. Significant deposits of clay, limestone, marble, silica, and phosphate exist. About 60% of total mining production are accounted for by non-metallic minerals, which contributed substantially to the industry's steady output growth between 1993 and 1998, with the value of production growing 58%. In 1999, however, mineral production declines 16% to $793 million. Mineral exports have generally slowed since 1996. Led by copper cathodes, Philippine mineral exports amounted to $650 million in 2000, barely up from 1999 levels. Low metal prices, high production costs, lack of investment in infrastructure, and a challenge to the new mining law have contributed to the mining industry's overall decline.

The industry went on a rebound starting in late 2004 when the Supreme Court deemed an important law permitting 100% foreign ownership of Philippine mining companies constitutional. The Supreme Court of the Philippines ( Filipino: Kataas-taasang Hukuman ng Pilipinas or Korte Suprema) is the country's highest judicial court as well

The Department of Environment and Natural Resources is ill equipped to address the renewed interest in mining. There are several companies that mine under the Small Scale Mining (SSM) that should rightly be classified and taxed under the large scale mining laws. The DENR is taking some time to inform these companies that they are violating the SSM laws by mining more than 50,000 tons of ore per year.

The DENR has yet to approve the revised Department Administrative Order (DAO) that will provide the Implementing Rules and Regulations of the Financial and Technical Assistance Agreement (FTAA), the specific part of the 1994 Mining Act that allows 100% foreign ownership of Philippine mines. The current DAO 99-56 is deficient because it is confusing and open to abuse.

Transportation

Main article: Transportation in the Philippines

Transport of people, goods and services in the country is done mostly by motorized vehicles, boats and planes. Land Transportation Railways See main article - Rail transport in the Philippines Most are on Luzon, operated by the Philippine Land transportation vehicles are imported, except for the jeepney and tricycle which are locally made. Jeepneys are the most popular means of Public transportation in the Philippines. A tricycle (often abbreviated to trike) is a three-wheeled vehicle

Statistics

Geothermal power station in Negros Oriental. Geothermal power (from the Greek roots geo, meaning earth and therme, meaning heat is energy generated by heat stored in the earth or the collection Negros Oriental (also called Oriental Negros) is a province of the Philippines located in the Central Visayas region.

• GDP: purchasing power parity - $298. 9 billion (2007 est. )
• GDP - real growth rate: 7. 3 % (2007)^[9]
• GDP - per capita: purchasing power parity - $5,700(2007 est. )
• GDP - composition by sector:

  agriculture: 14. 1%

  industry: 32. 3%

  services: 54. 6% (2007 est. )

• Population below poverty line: 30% (2003 est. )
• Household income or consumption by percentage share:

  lowest 10%: 2. 4%

  highest 10%: 31. 2% (2006)

• Inflation rate (consumer prices): 2. 8% (2007)
• Labor force: 35. 79 million (2006), 41. 93 million (2007)
• Labor force by occupation: (2007 est. )

  agriculture 35%

  industry 15%

  services 50% (2007 est. )

• Unemployment rate:7. 3% (2007 est. )
• Budget:

  revenues: $23. 96 billion

  expenditures: $25. 24 billion (2007 est. )

• Industries: electronics assembly, garments, footwear, pharmaceuticals, chemicals, wood products, food processing, petroleum refining, fishing
• Industrial production growth rate: 7% (2007 est. )
• Electricity - production: 53. 67 billion kWh (2005)
• Electricity - consumption: 46. 86 billion kWh (2005)
• Electricity - exports: 0 kWh (2001)
• Electricity - imports: 0 kWh (2001)
• Agriculture - products: sugarcane, coconuts, rice, corn, bananas, cassavas, pineapples, mangoes; pork, eggs, beef; fish
• Exports: $48. 38 billion f. o. b. (2007 est. )
• Exports - commodities: semiconductors and electronic products, transport equipment, garments, copper products, petroleum products, coconut oil, fruits
• Exports - partners: US 18. 3%, Japan 16. 5%, Netherlands 10. 1%, China 9. 8%, Hong Kong 7. 8%, Singapore 7. 3%, Malaysia 5. 6%, Taiwan 4. 3% (2006)
• Imports: $53. 96 billion f. o. b. (2007 est. )
• Imports - commodities: electronic products, mineral fuels, machinery and transport equipment, iron and steel, textile fabrics, grains, chemicals, plastic
• Imports - partners: US 16. 3%, Japan 13. 6%, Singapore 8. 5%, Taiwan 8%, China 7. 1%, South Korea 6. 2%, Saudi Arabia 5. 8%, Malaysia 4. 1%, Thailand 4. 1%, Hong Kong 4% (2006)
• Debt - external: $62. 84 billion (31 December 2007 est. )
• Economic aid - recipient: ODA, $451. 4 million in commitments (2006)
• Currency: 1 Philippine peso (P) = 100 centavos
• Exchange rates: Philippine pesos per US dollar - 46. The peso ( Filipino: piso) ( sign: ₱; code: PHP) is the currency of the Philippines. 148 (2007), 51. 246 (2006), 55. 086 (2005), 56. 04 (2004), 54. 203 (2003)
• Fiscal year: Calendar year

Most statistics sourced from World Factbook - Philippines.

See also

• Department of Trade and Industry
• Philippine Stock Exchange
• Next Eleven
• Newly industrialized countries

References

External links

• State of the Philippine Islands A book written by a Spaniard during the early 1800s that studies the economic conditions of the Philippines which was then, a colony of Spain. An online book published by Filipiniana.net.
• Bangko Sentral ng Pilipinas (Central Bank of the Philippines)
• National Statistical Coordination Board
• National Statistics Office
• Department of Trade and Industry
• Philippine Stock Exchange
• National Federation of Sugarcane Planters
• Department of Tourism
• Philippines Business Brokers
• Union Bank of the Philippines