Coface Group


Population 99.434 million
GDP 286.686 US$ billion
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  2012 2013 2014 (e) 2015 (p)
GDP growth (%) 6.8 7.2 5.8 6.5
Inflation (yearly average) (%) 3.2 2.9 4.5 3.9
Budget balance (% GDP) -2.3 -1.4 -1.5 -2.3
Current account balance (% GDP) 2.8 3.5 3.2 2.6
Public debt (% GDP) 40.6 39.1 36.3 33.9


(f) Forecast


  • Economy reputed for its electronic industry (more than 40% of exports).
  • Constant growth in exports to emerging Asia: these represented over 50% of exports in 2012.
  • Household consumption and external accounts are benefiting from expatriate’s workers remittances.
  • Thriving business process outsourcing (BPO) sector


  • Low level of investment, particularly in infrastructure.
  • Governance shortcomings
  • Social inequalities and demographic growth affect economic performance


Rebound in growth in 2015

In 2014, growth suffered from a drop in public expenditure. Indeed, the Supreme Court invalidated part of the recovery plan launched in 2011 by President Aquino, leading to the suspension of spendings. Nevertheless, parliament is currently studying new solutions for financing and the Philippine economy will thus benefit, in 2015, from a resumption in public expenditure, particularly thanks to projects to rebuild disaster zones after the typhoon Haiyan and continuation of infrastructure projects in PPP. These expenses should have a positive effect on growth, even more so as the public finances of the country are healthy and will allow the government to easily fund these projects. However, the Philippine government has often encountered difficulties in implementing infrastructure projects over the last few years.
Also, the main driver of growth in the country will remain household consumption (70% of GDP). Internal demand will be sustained by the strong increase in credit and the constant increase in remittances. Furthermore, exports of electronic products will remain strong and will continue to benefit from the boom in sales of smartphones. The Business Process Outsourcing sector, which represents 25% of exports, will also remain dynamic.
The construction sector will undergo rapid growth, driven by the development of infrastructure and urbanisation. Nevertheless, the country continues to suffer from shortcomings in infrastructure, particularly electrical infrastructure, which negatively effects activity.
Concerning prices, inflation should come down. Food prices increased following the typhoon Haiyan and have since stabilised. Furthermore, the drop in oil prices should also enable inflation to be stabilised.

The financial situation of the country remains very sound

The macroeconomic fundamentals of the Philippines have strongly improved over the last few years. Even though the budget deficit should rise in 2015, due to the increase in expenses allocated for reconstruction and development of infrastructure and the tax exemptions in some sectors, public debt should continue to fall.
Concerning the external accounts, the Philippines should continue to have a current account surplus. Remittances from migrant workers (official transfers represent nearly 10% of GDP) ensure that the Philippine external accounts are very strong. They proved to be particularly robust during the crisis, as Philippine expatriates were present everywhere throughout the world and in different types of job.
Nevertheless, the trade balance should worsen in 2015 due to the rapid increase in imports stimulated both by household consumption and requirements for inputs for industry. Exports of services (particularly Business Process Outsourcing) have been on an upward trend over the last few years. In this context, foreign exchange reserves will remain at a very comfortable level (nearly 12 months of imports in 2015).


Beginnings of the 2016 presidential campaign

The mid-term elections of May 2013 enabled President Benigno Aquino (Liberal party) to consolidate his coalition. During the election campaign of 2010, B. Aquino won the support of voters by focusing his campaign on improving governance and its positive impact on the economy. As the constitution does not allow him to stand for a second term of office in 2016, there are uncertainties concerning his succession. The popularity of the President and his party worsened following the typhoon Haiyan as the efficiency of the government's reaction was disputed. Furthermore, the president faced an impeachment procedure in September 2014. This was, however, clearly rejected. Jejomar Binay, the current vice president and leader of the opposition, is a favourite for the 2016 elections but his lead could be compromised due to suspicions of corruption (a Senate enquiry is ongoing). Manuel Roxas, Secretary of State for Internal Affairs and failed candidate for the Vice Presidency in 2010, is seen to be candidate for the Liberal Party, but he suffers from lack of popularity.
In spite of ambitious targets to improve governance set by President Aquino, the country still suffers from major shortcomings concerning corruption (the country is ranked at 119th out of 215 by the World Bank). Shortcomings also persist concerning respect for the rule of law and the quality of regulations.
Lastly, President Aquino won a victory concerning homeland security. A peace agreement was made in October 2012 with the armed rebellion movement which has, over the last 40 years, fought for the creation of an independent Islamic state on the island of Mindanao. This was then confirmed in August 2014 by an agreement on the law that will govern the autonomy of this region. This law should now be approved by the Parliament.

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