Economy of the Philippines

The Philippines is a newly industrialized country in South-East Asia. In 2004, it was ranked as the 24th largest economy by the World Bank according to purchasing power parity.

The Philippines is one of the emerging markets in the world.

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.

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.

ECONOMY

Since the end of World War II, the Philippine economy has had a mixed history of growth and development.

Over the years, the Philippines has gone from being one of the richest countries in Asia (following Japan) to being one of the poorest.

Growth immediately after the war was rapid, but slowed over time.

A severe recession in 1984-85 saw the economy shrink by more than 10%, and perceptions of political instability during the Aquino administration further dampened economic activity.

During his administration, President Ramos introduced a broad range of economic reforms and initiatives designed to spur business growth and foreign investment.

As a result, the Philippines saw a period of higher growth, but the Asian financial crisis triggered in 1997 slowed economic development in the Philippines once again.

President Estrada managed to continue some of the reforms begun by the Ramos administration.

Important laws to strengthen regulation and supervision of the banking system (General Banking Act) and securities markets (Securities Regulation Code), to liberalize foreign participation in the retail trade sector, and to promote and regulate electronic commerce were enacted during his abbreviated term.

Despite occasional challenges to her presidency and resistance to pro-liberalization reforms by vested interests, President Arroyo has made considerable progress in restoring macroeconomic stability with the help of a well-regarded economic team.

Nonetheless, long-term economic growth remains threatened by widespread poverty, crumbling infrastructure and education systems, and trade and investment barriers.

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.

Mining also has great potential in the Philippines, which possesses significant reserves of chromite, nickel, and copper.

Significant natural-gas finds off the islands of Palawan have added to the country's substantial geothermal, hydro, and coal energy reserves.

Merchandise trade

- Imports contracted by 1.8% in April to $4.3 billion from $4.4 billion last year.

Despite the drop, merchandise imports remained bigger than exports, which reached $4.1 billion for the same month.

This resulted to a trade deficit of $219 million, narrower by 56.1 percent from last year’s deficit of $499 million.

Electronics, which accounted for 42.6 percent of imports, declined by 17.3 percent to $1.8 billion from $2.2 billion a year ago.

Other imported products that recorded significant drop were cereal products, iron and steel and plastics, which contracted by 35.7 percent, 16.8 percent, and 14.2 percent, respectively.

- For the eighth consecutive time, the U.S. Federal Reserve decided to leave its key interest rate unchanged at 5.25 percent in its policy meeting held on June 28, 2007.

The decision to hold rates steady was primarily attributed to the modest improvement in inflation in the recent months. U.S. core inflation rose by just 2.0 percent year-on-year in April, its smallest in over a year.

- The government announced its plans to generate additional revenues of P105 billion through the sale of its remaining stake in PNOC-Energy Development Corporation (EDC), San Miguel Corporation (SMC), and Manila Electric Company (MER).

The proceeds would be used to help the government attain its programmed deficit for the year.

- The peso weakened against the dollar during the week, closing at P46.24 per dollar, down by 0.39 percent or 18 centavos from last week’s close of P46.06 per dollar.

The peso’s performance was limited by the strength of the dollar following the US Fed’s decision to keep its key rate steady.

- The PSEi closed the week lower at 3,665.23 points, down by 0.97% or 35.93 points from the previous week’s close of 3,701.16 points.

Among the PSEi members which posted losses in their share prices during the week were Lepanto Consolidated Mining Company “B” & “A” (LCB & LC) and Manila Mining Corporation “A” (MA) which share prices dropped by 13.89 percent, 9.68 percent, and 8.33 percent, respectively.

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