Economy, Finance and Trade:
The Philippines
Euromonitor International
March 2023
ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
LIST OF CONTENTS AND TABLES
HEADLINES ................................................................................................................................. 1
PROSPECTS ............................................................................................................................... 1
Philippines’ economy outperforms Asia Pacific countries in 2022 ............................................ 1
Rising inflation in the Philippines put A strain on consumers' purchasing power ...................... 1
Philippines’ exports boosted by machinery and electronics ...................................................... 2
Business confidence in the Philippines prompts surge in capital expenditure .......................... 2
Government increases its spending on social security and welfare .......................................... 3
COUNTRY RISK ANALYSIS ........................................................................................................ 3
ECONOMIC LANDSCAPE ........................................................................................................... 3
Chart 1
Chart 2
Chart 3
Chart 4
Chart 5
Chart 6
Chart 7
Chart 8
Chart 9
Economic Landscape of the Philippines 2022-2027 ..................................... 3
Real GDP Growth in the Philippines 2010-2027 .......................................... 4
GDP Size and Growth 2017-2027 ................................................................ 4
Gross Value Added by Sector in the Philippines 2022 ................................. 4
Domestic Demand 2022 and Period Growth 2017-2022 .............................. 5
Standardised Business Confidence Index 2017-2024 .................................. 5
Standardised Consumer Confidence Index 2017-2024 ................................ 6
Productivity 2017/2022 ................................................................................. 6
Productivity by Sector in the Philippines 2022 and CAGR 2017-2022 ......... 7
MONETARY INDICATORS .......................................................................................................... 7
Chart 10
Chart 11
Chart 12
Chart 13
Chart 14
Chart 15
Monetary Landscape of the Philippines 2022............................................... 8
Inflation 2017-2027....................................................................................... 8
Average Inflation 2017-2027 ........................................................................ 8
Interest Rates in the Philippines 2017-2024 ................................................. 9
Exchange Rates 2017-2024 ......................................................................... 9
Money Supply Growth and Money Velocity in the Philippines 20172024 ........................................................................................................... 10
FOREIGN TRADE ...................................................................................................................... 10
Chart 16
Chart 17
Chart 18
Chart 19
Chart 20
Chart 21
Chart 22
Foreign Trade Landscape of the Philippines 2022 ..................................... 10
Exports and Export Price Index in the Philippines 2017-2022 .................... 11
Exports by Commodity in the Philippines 2022 .......................................... 11
Top 10 Export Destinations 2022 and Period Growth 2017-2022 .............. 12
Imports and Import Price Index in the Philippines 2017-2022 .................... 12
Imports by Commodity in the Philippines 2022 .......................................... 13
Top 10 Import Origins 2022 and Period Growth 2017-2022 ....................... 13
INVESTMENTS .......................................................................................................................... 14
Chart 23
Chart 24
Chart 25
Chart 26
Investment Landscape of the Philippines 2021-2022 ................................. 14
Foreign Direct Investment Inflows and FDI Intensity 2021 ......................... 14
Foreign Direct Investment Inflows and Outflows in the Philippines
2016-2021 .................................................................................................. 15
Gross Fixed Capital Formation in the Philippines 2017-2024..................... 15
GOVERNMENT FINANCE ......................................................................................................... 16
Chart 27
Chart 28
Chart 29
Chart 30
Government Budget Landscape of the Philippines 2022............................ 16
Public Debt 2022 ........................................................................................ 16
Government Revenue 2022 ....................................................................... 17
Government Expenditure 2022 .................................................................. 17
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Chart 31
Chart 32
Government Expenditure by Economic Type in the Philippines 2022 ........ 18
Government Expenditure by Function in the Philippines 2022 and
Period Growth 2017-2022 .......................................................................... 19
FORECAST RISKS .................................................................................................................... 19
Chart 33
Baseline and Scenario Forecasts in the Philippines 2020-2026................. 19
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
ECONOMY, FINANCE AND TRADE:
THE PHILIPPINES
The Philippines' economy expanded in 2022, exceeding both regional and previous year
growth rates, mainly driven by the services sector, specifically wholesale and retail trade.
However, rising inflation has put a strain on purchasing power, leading to the country’s central
bank tightening monetary policy. In 2022, the Philippines has seen increased FDI and business
confidence, leading to a surge in capital expenditure.
HEADLINES
▪ Following real growth of 7.2% in 2022, the economy of the Philippines is expected to expand
at a slower pace of 6.0% on average annually over 2022-2027
▪ Inflation in the Philippines is forecast to slow down to 4.5% in 2023 from 5.8% in 2022
▪ While the country’s merchandise exports increased by 4.1% and imports rose by 17.8%
during 2022, the Philippines remained a net importer of goods
▪ Gross fixed capital formation (GFCF) continued to increase over 2022, accounting for 23.8%
of GDP
▪ The public debt-to-GDP ratio in the Philippines rose to 58.5% in 2022, standing below the
regional average of 96.6%
PROSPECTS
Philippines’ economy outperforms Asia Pacific countries in 2022
The Philippines’ economy exceeded expectations in 2022, with growth surpassing the Asia
Pacific average and the previous year's expansion. The growth was driven by an influx of new
tourists and the easing of supply chain linkages after the lifting of strict COVID-19 restrictions in
China, as well as high continuing remittance inflows, mainly from the US. The optimism of the
post-pandemic domestic environment, coupled with greater domestic mobility, also contributed
to the recovery of social activities and services such as transportation, restaurants, and
wholesale and retail trade.
Looking ahead, the Philippines’ economic forecast is positive as it is expected to post a
CAGR of 6% in real terms from 2022 to 2027, continuing to outpace the Asia Pacific region. The
positive economic outlook will be powered by the services sector, which accounted for 58.0% of
overall gross value added (GVA) in 2022. Wholesale and retail trade will remain the primary
contributor to the economy, representing 19.1% of total GVA among significant industries.
Rising inflation in the Philippines put A strain on consumers' purchasing
power
The 2022 inflation surge in the Philippines was mostly driven by rapid increases in housing
rent, electricity and water rates as well as soaring energy, food and other commodity prices in
the aftermath of the pandemic and global geopolitical tensions. The Philippines’ national
currency depreciated by 10.6% against the US dollar in 2022, leading to higher import costs and
contributing to rising inflation. Stronger inflationary pressures translated into higher costs for
businesses and eroded consumer real income gains, reducing their purchasing power.
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
To curb the inflation, the country’s central bank implemented one of the most aggressive
monetary policies in the region. Tighter monetary policy is expected to help slow down price
growth, yet will put a strain on the country's economic activity and investments. Among major
groups of consumer goods and services, alcoholic drinks and tobacco products, transport, as
well as food and non-alcoholic beverages witnessed the largest price increases in the
Philippines in 2022. Inflationary pressures are expected to cool down as commodity prices
gradually ease, monetary tightening across many economies bears fruit, and both consumer
and B2B demand weakens amidst the global economic slowdown. Over the next five years, the
inflation rate is expected to fall in the Philippines, reaching 2.9% by 2027.
Philippines’ exports boosted by machinery and electronics
In 2022, the Philippines experienced an increase in the value of exported goods, primarily
driven by the substantial growth in exports of machinery and electronic equipment. The
country's exports contributed to 19.3% of its GDP, which was lower than the average of 26.6%
in the Asia Pacific region. The machinery and electronic equipment category remained the
largest exports category, accounting for 65.6% of total exports value. Although food exports also
played an important role, elevated agrifood commodity prices drove stronger exports revenue
growth. The US continued to be the primary exports partner, with 15.2% of goods exported.
In January 2022, the Regional Comprehensive Economic Partnership (RCEP) came into
force, creating a new Asia Pacific trading bloc between the 10 ASEAN (Association of Southeast
Asian Nations) countries, Australia, China, Japan, New Zealand and South Korea. RCEP is also
expected to further enable supply chain diversification strategies, encouraging production
relocation to low-cost Southeast Asian countries. As a result, emerging countries such as
Vietnam, Indonesia, Thailand, Cambodia and the Philippines are aiming to enhance their
manufacturing power with firms increasingly looking for alternatives to diversify their operations.
Notably, the Philippines’ Senate was among the last to sign the agreement, as it faced strong
opposition from the general population. There were worries that the free trade agreement will
open the country to an overwhelming number of imports, pushing out local agricultural groups.
Business confidence in the Philippines prompts surge in capital
expenditure
FDI flows to the Philippines have increased in real terms compared to 2020, and as of 2021,
the country ranked 11th out of 43 countries in Asia Pacific in terms of FDI inflows. Notably, FDI
inflows as a percentage of GDP remained above the regional average of 1.8%. By the end of
2021, the Philippines’ government had amended the Retail Trade Liberalization Act, reducing
the minimum paid-up capital requirements for foreign retail enterprises and facilitating other
requirements for each store owned by a foreign enterprise. These changes, coupled with the
country's open economy allowing full foreign ownership in most sectors, young labour force and
strategic location in the centre of the ASEAN bloc, are expected to continue to make the
Philippines a desirable destination for foreign direct investment.
In 2022, GFCF in the Philippines rose in real terms, driven by strong economic growth,
improving business confidence and infrastructure stimulus packages. This increase in industrial
activity prompted companies to lift capital expenditure to improve operational efficiency and
boost production capacity. Looking ahead to 2023, capital investment in the Philippines is
anticipated to pick up further as governments and businesses continue to focus on sustainability
and building resilience, supporting investments in green and digital infrastructure development.
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Government increases its spending on social security and welfare
The Philippines' government in 2022 ran a budget deficit, with government revenue increasing
by 5.2% and public expenditure growing by 1.2% over the year. Among the spending
categories, social security and welfare witnessed the strongest growth. In 2022, spending on
general public services remained the largest category of government spending. The
Commission on Elections also incurred significant expenditure during the year, with presidential
elections concluding in the spring of 2022, resulting in the victory of Ferdinand Marcos Jr.
Despite the government's efforts, the Philippines' public debt rose by 9.9% over 2022, leading
to an increase in the public debt-to-GDP ratio from 57.0% in 2021 to 58.5% in 2022, remaining
below the regional average of 96.6%. However, the rising public debt could be problematic,
especially as inflation increases and interest rates rise, increasing the cost of borrowing and
limiting the government's ability to spend. These challenges call for prudence in managing debt
and conducting fiscal policy, given the heightened economic uncertainty and tighter monetary
policy.
In 2023, President Marcos Jr. signed the General Appropriations Act, which comprises the 8Point Socioeconomic Agenda under the Medium-Term Fiscal Framework, focusing on areas
such as food security, improved transportation, affordable and clean energy, healthcare, social
services, education, bureaucratic efficiency and sound fiscal management. The country's budget
deficit is expected to contract to 4.5% of total GDP in 2023.
COUNTRY RISK ANALYSIS
Economic uncertainties and risks have increased, taking a toll on the Philippines’ growth
prospects. According to the global stagflation scenario, worse-than-expected global negative
spillovers from Russia’s invasion of Ukraine would lead to stagnant global economic growth
combined with high inflation (stagflation). Rising geopolitical tensions would negatively impact
private sector confidence and cause further disruptions to global energy and food supply,
increasing the likelihood of more persistent price pressures. Under this scenario, the Philippines’
economy would expand by 1.1% annually in real terms in 2023 and grow by 3.0% in 2024.
ECONOMIC LANDSCAPE
Chart 1
Source:
Note:
Economic Landscape of the Philippines 2022-2027
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF)/
International Financial Statistics (IFS)/ International Labour Organization (ILO)/World Economic Outlook
(WEO)
Data for 2023-2027 is forecast
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Chart 2
Source:
Note:
Chart 3
Source:
Note:
Chart 4
Real GDP Growth in the Philippines 2010-2027
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund
(IMF)/World Economic Outlook (WEO)
Data for 2023-2027 is forecast
GDP Size and Growth 2017-2027
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund
(IMF)/World Economic Outlook (WEO)
Data for 2023-2027 is forecast
Gross Value Added by Sector in the Philippines 2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Chart 5
Source:
Chart 6
Euromonitor International from national statistics
Domestic Demand 2022 and Period Growth 2017-2022
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund
(IMF)/International Financial Statistics (IFS)
Standardised Business Confidence Index 2017-2024
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Note:
Chart 7
Source:
Note:
Chart 8
Euromonitor International from national statistics/Eurostat
Data from 2023 onwards is forecast
Standardised Consumer Confidence Index 2017-2024
Euromonitor International from national statistics/Eurostat
Data from 2023 onwards is forecast
Productivity 2017/2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Euromonitor International from International Labour Organization (ILO)/Eurostat/national statistics
Chart 9
Productivity by Sector in the Philippines 2022 and CAGR 2017-2022
Source:
Euromonitor International from International Labour Organization (ILO)/Eurostat/national statistics
MONETARY INDICATORS
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Chart 10
Source:
Chart 11
Source:
Note:
Chart 12
Monetary Landscape of the Philippines 2022
Euromonitor International from national statistics
Inflation 2017-2027
Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN
Data for 2023-2027 is forecast
Average Inflation 2017-2027
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Note:
Chart 13
Source:
Note:
Chart 14
Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN
Data for 2023-2027 is forecast
Interest Rates in the Philippines 2017-2024
Euromonitor International from national statistics/OECD
Data from 2023 onwards is forecast
Exchange Rates 2017-2024
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Note:
Chart 15
Source:
Note:
Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD
Data from 2023 onwards is forecast
Money Supply Growth and Money Velocity in the Philippines 2017-2024
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF)/
International Financial Statistics (IFS)
Data from 2023 onwards is forecast
FOREIGN TRADE
Chart 16
Foreign Trade Landscape of the Philippines 2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Chart 17
Source:
Chart 18
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund
(IMF)/World Economic Outlook (WEO)/International Financial Statistics (IFS)
Exports and Export Price Index in the Philippines 2017-2022
Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN
Exports by Commodity in the Philippines 2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Chart 19
Source:
Chart 20
Euromonitor International from United Nations (UN)/International Merchandise Trade Statistics
Top 10 Export Destinations 2022 and Period Growth 2017-2022
Euromonitor International from International Monetary Fund (IMF)/Direction of Trade Statistics
Imports and Import Price Index in the Philippines 2017-2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Chart 21
Source:
Chart 22
Euromonitor International from national statistics/International Monetary Fund (IMF)/European Central
Bank/International Finance Statistics (IFS)/OECD/UN
Imports by Commodity in the Philippines 2022
Euromonitor International from United Nations (UN)/International Merchandise Trade Statistics
Top 10 Import Origins 2022 and Period Growth 2017-2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Euromonitor International from International Monetary Fund (IMF)/Direction of Trade Statistics
INVESTMENTS
Chart 23
Source:
Chart 24
Investment Landscape of the Philippines 2021-2022
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF)/
International Financial Statistics (IFS)/UNCTAD
Foreign Direct Investment Inflows and FDI Intensity 2021
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Chart 25
Source:
Chart 26
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF)/
International Financial Statistics (IFS)/UNCTAD
Foreign Direct Investment Inflows and Outflows in the Philippines 2016-2021
Euromonitor International from national statistics/UNCTAD
Gross Fixed Capital Formation in the Philippines 2017-2024
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Note:
Euromonitor International from national statistics/Eurostat/OECD/UN/International Monetary Fund (IMF)/
International Financial Statistics (IFS)
Data from 2023 onwards is forecast
GOVERNMENT FINANCE
Chart 27
Source:
Chart 28
Government Budget Landscape of the Philippines 2022
Euromonitor International from International Monetary Fund (IMF)/national statistics/World
Bank/Government Finance Statistics (GFS)/Eurostat
Public Debt 2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Euromonitor International from International Monetary Fund (IMF)
Chart 29
Source:
Government Revenue 2022
Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national
statistics/Eurostat
Chart 30
Government Expenditure 2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Chart 31
Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national statistics/Eurostat
Government Expenditure by Economic Type in the Philippines 2022
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
Source:
Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national statistics
Chart 32
2017-2022
Source:
Government Expenditure by Function in the Philippines 2022 and Period Growth
Euromonitor International from International Monetary Fund (IMF)/Government Finance Statistics
(GFS)/national statistics
FORECAST RISKS
Chart 33
Source:
Baseline and Scenario Forecasts in the Philippines 2020-2026
Euromonitor International Macro Model
In the Global Stagflation scenario, worse-than-expected global negative spillovers from the
war in Ukraine through uncertainty, confidence and supply constraint channels cause stagnant
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ECONOMY, FINANCE AND TRADE: THE PHILIPPINES
global economic growth combined with high inflation (stagflation). More abrupt and stronger cuts
of Russian energy exports to advanced economies and more difficult than expected energy
decoupling from Russia worsen supply constraints and lead to higher energy price increases.
Private sector confidence declines by 15-35% and financial risk premia rise by another 1-3
percentage points relative to the baseline forecast. Estimated probability: 25-35% over a oneyear horizon.
In the C19 Pessimistic1 scenario, the spread of a more infectious and highly vaccine-resistant
COVID-19 mutation requires intense lockdowns and social distancing measures in 2023,
delaying the economic recovery from the pandemic. The negative direct effects of the ongoing
pandemic on economic activity are amplified by declining private sector confidence, rising
uncertainty about the end of the pandemic, worsening financial market conditions and a more
limited ability of governments to expand fiscal support programmes. Estimated probability: 717% over a one-year horizon.
Growth Slowdown scenario represents a typical/most likely combination of declining private
sector confidence and deterioration in financial market conditions. More pessimistic
expectations, higher uncertainty about the future and worsening credit conditions reduce
consumer spending and business investment. GDP growth declines significantly below the
baseline for at least one year. Inflation declines and the central bank cuts interest rates in
response. Estimated probability: 15-25% over the coming year.
Growth Acceleration scenario represents a typical/most likely combination of rising confidence
and better financial market conditions. Greater optimism, lower uncertainty about the future and
improving credit conditions boost consumer spending and business investment. GDP growth
rises significantly above the baseline forecast for at least one year. Inflation increases, and the
central bank responds by raising interest rates. Estimated probability: 15-25% over the coming
year.
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