Economic Situation in the Philippines

2021-05-13 06:03:03
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The Philippines is an island country in Asia situated in the Western Pacific Ocean. The country has acquired the status of an emerging economy that has grown steadily at a rate of 6% in the last three years. This growth can be mainly attributed to the high inflow of direct investments and remittances into the country. I believe the country is on a good course of economic growth given that it has become one of the worlds largest centres for process outsourcing. The country possesses a strong industrial sector that has for years manufactured electronic and high tech equipment for overseas corporations.

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The country also has notable accomplishments regarding the governments application macroeconomic policies. The total tax burdens are only at 13.3% of its total national income while the governments spending is at 18.6 percent of GDP. This narrow budget gap has allowed the budget deficits to remain low to facilitate the stimulation economic growth. The country has experienced a 4.5% growth in output per capita between 2011 and 2015, capping an all-time high of US $1649.35 in 2014 (Trading Economics, 2016). It has also averaged a 1.57 % growth in population for the last two years.

The Philippines has an open economy that is evident through its trading activities with other overseas nations. Its current unemployment rate stands at 5.8%, which was reported in January 2016 by the National Statistics Office in the Philippines. This is down from 6.6%, which was reported last year. The United States, contrariwise, recorded a 5% unemployment rate as recorded by the U.S. Bureau of Labour Statistics. This is down from 5.4% that was also recorded last year. Given the inverse relationship between the unemployment rate and economic growth, this suggests that the Philippines has experienced a higher growth in its economy compared to the U.S. since it has a much larger decrease in unemployment rate.

The Philippines actively engages in trade both locally and international. Its location in the heart of Asia offers it a strategic business location, for international trade. It serves as a critical point of entry to the ASEAN market, which serves over 500 million people. It also acts as a doorway to international shipping and so evenly competitive to American and European corporations. In addition, Philippines has quality manpower and resources that make the country one of the major players in trade. The country also features a mixed economy with private investors who possess the freedom to open production lines and market them both locally and internationally.

The foreign exchange in the Philippines is highly undervalued. As such, the Philippine peso has for years been the most undervalued currency in the world. The countrys Central Bank has made significant efforts to shield its economy and currency from the high inflow of foreign money into the country. However, in 2013, the central bank was reported to have run low on intervention funds and forced to allow the peso to appreciate on its own.

ReferencesTrading Economics. (2016). Philippines GDP per capita | 1960-2016 | Data | Chart | Calendar | Forecast. Tradingeconomics.com. Retrieved 16 May 2016, from http://www.tradingeconomics.com/philippines/gdp-per-capita

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