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Philippines - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: Manila
Area:: 300 km2
Total Population:: 96.707
Annual growth rate:: 2.00%
Density:: 324.00/km2
Urban population:: 49%
Population of Manila Metro (13.503), Quezon City (2.680), Caloocan (1.379), Davao City (1.363), Cebu City (1.198)
Official language: Filipino and English.
Other languages spoken: There are nearly 70 languages in the islands, but the most prevalent minority languages are Visayan (Cebuano), and Ilokano. Spanish is hardly used by the population.
Business language: English. One may however meet Spanish speaking people.
Ethnic Origins:: Tagalog 28.1%, Cebuano 13.1%, Ilocano 9%, Bisaya/Binisaya 7.6%, Hiligaynon Ilonggo 7.5%, Bikol 6%, Waray 3.4%, others 25.3%.
Beliefs: Catholics 83%; Protestants 9%; Muslims 5%; Others 3%.
Telephone codes:
To make a call from: 0
To make a call to: +63
Internet suffix:: .ph
Type of State::
Republic based on a presidential government
Type of economy::
Country with intermediate income (lower section), emerging financial market
Economy which primarily depends on agriculture; world's largest producer of coconut products. The highest birth rate in Asia.

Economic overview

The Philippines' economy has strengthened in the recent years, a fact that protected it from the direct impacts of the global financial crisis and the recession in 2009, but without sparing it totally. In spite of unfavorable international context, growth reached 7.2% in 2013, thanks to domestic consumption, employment and vigorous FDI flows. Growth of 6.5%-7.5% of the GDP is expected in 2014.

In November 2014, the new "Asian Tiger" was hhit by the typhoon Haiyan, one of the most powerful since records began, which cost many lives and caused great demange to the infrastructure and agricultural sector. The economy is nevertheless in a relatively good shape and the country has large foreign exchange reserves. The government's priority remains fighting against poverty and unemployment.The 2014 budget, which has increased by 13% compared to the 2013 budget, introduces many reform measures in the area of public spending, trying to make the budget process more efficient and transparent (Performance informed budget). A great part of the budget has been allocated to social services, including subsidies and funding for school and healthcare establishments. Paving the national roads, providing technical support to farmers, promoting tourism and preventing and managing natural catastrophes are also part of the agenda. 

On a social level, the country faces several challenges: the population living under the poverty threshold has increased in these recent years (33% of the population), in 2009 the crisis aggravated the unemployment rate (7% of the active population), although it is now decreasing, there is a significant demographic growth and the inequality in wealth distribution persists.

Main industries

The agricultural  sector employs about 35% of the labor force but contributes to less than 13% of the GDP. The Philippines is one of the world's main producers of rice and coconut. However, the agricultural sector suffers from low productivity, weak economies of scale and inadequate infrastructures. Fishing contributes to 3% of the GDP. The Philippines is one of the richest countries of the world in terms of minerals with an unexploited mineral wealth estimated at more than USD 840 billion. The Philippines reserves of copper, gold and zinc are among the largest of the world. 

The manufacturing sector contributes to around 30% of the GDP. Industrial food processing is one of  the Philippines' main manufacturing activities. The big industries are dominated by the production of cement, glass, chemicals products and fertilizers, iron, steel, and refined oil products.

The tertiary sector, which represents more than 55% of the GDP, has developed substantially especially in the fields of telecommunications, calling centers, and finance.

Foreign trade overview

During these two last decades, the Philippines' economy, which was relatively closed, has opened up, partly due to its ASEAN (Association of South-East Asian Nations) membership. Trade represents almost 60% of the country's GDP (average 2010-2012). Its three main export partners are the United States, Japan and China. The main export commodities are electronic and electrical equipment, nuclear reactors and boilers, vehicles and clothing. Its three main import partners are the United States, Japan and Singapore. The main import commodities are electronics and electrical equipment, mineral fuels and oil, nuclear reactors and boilers, iron, steel and vehicles.

Traditionally, the Philippines has a deficit trade balance. However, there is a trend towards the reduction of this deficit because of exports rising more quickly than imports. IN 2013, imports declined by 0.7%, reducing the deficit to 7.7b USD, against 10b in 2012. Trade should accelerate in 2014.

FDI

After increasing by 15.5% in 2012 compared to 2011, foreign direct investment (FDI) again rose by 20% in 2013, reaching 3.86b USD. Considering the comparative advantages of the Philippines, such as:  English speaking and well-skilled manpower, a strong cultural proximity to the United States, its geographical location in a dynamic area, the FDI flow in the Philippines remains rather weak. This can be partially explained by the fact that the country is evolving into a service society, with a low capital strength, which means a need of minimal equipment. In addition, the government favors subcontracting agreements between foreign companies and local enterprises rather than FDI in the strict sense of the term.  Lastly, corruption, instability, inadequate infrastructures and not enough juridical security discourages investment.
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