With the growing talk on the plunging forex rates and social media news on how the Philippine economy is fast declining, it pays to understand the true and current status of our economy by having a look at our Gross Domestic Product.
What is Gross Domestic Product or GDP?
Simply put, Gross Domestic Product is the total monetary value of all the finished goods and services produced within a country’s borders in a specific time period.1 This means if a certain area produces goods (like sugar or native baskets), the total earnings are computed in a quarter until it is concluded towards the end of the year.
In a previous post, it has been noted that the Philippines has surpassed the GDP growth of neighbors China 7.7%, Indonesia 6%, Thailand 5.3% and Vietnam at 4.9% as of 2014. During these times, it was observed that what makes the Philippines and China get passed thru other countries is due to their stable politics, lower levels of debt and large labor forces.
On the last quarter of 2015, the Philippine GDP grew to a confident 6.3%, an average growth rate that we have been enjoying since 2010 - 2014. This is a huge leap from the average from other developing countries. The future remains to look bright for the Philippine economy. Many are hopeful for the incoming year, 2016.
Further good news
In August 2016, the latest gross domestic product was announced by the Socioeconomic Planning Secretary Ernest Pernia, saying that the Philippines was the fasted growing country in Asia, with a 6.8% growth recorded in the first quarter of this year. As expected, the Philippine’s growth demonstrated a consistent growth rate between 6.5% to 7%.
It is identified that the growth is mainly because of foreign investors in the services industry. The Philippines is known to be the mecca of the BPO industry with its world-class quality in customer service, English proficiency and a massive workforce willing to go the distance and compromise healthy sleep hours, strong rain downpours, weekend and holiday restdays.
The Socioeconomic Planning Secretary further adds, “Among the major Asian emerging economies, the Philippines like remains the fastest and second fastest-growing economy in the second quarter of 2016, followed by China, which grew by 6.7%, Vietnam by 5.6%, Indonesia by 5.2% and Thailand by 3.5%.2
Pernia is also confident that as the trend had been consistent for the country since 2010, it is expected that this growth will remain throughout the remaining months of 2016.
In more recent news
In a separate news this October, it is noted that foreign investors from the EU and US are having second thoughts about expanding or establishing business in the Philippines. Many are also cancelling trade and investment missions in the country.
Senior Advisor of the American Chamber of Commerce John Forbes is stated as saying, “The anti-American comments are beginning to harm new opportunities for the Philippines, as we know several trade missions and BPO investment plans have been cancelled. This is regrettable.”3
While many of the Filipino people remain divided when it comes to the temperament of the President towards foreign investors, specifically the US, financial analyst remain hopeful, despite the fact that Philippine stock prices have seen a plunge since the President’s inauguration in June.
According to Bloomberg, the said plunge in the Philippine equities was fuelled by foreign fund managers withdrawing some $248 million from the country since August of this year.4
The state of the nation remain unsteady as numbers in GDP seem to reflect a stark contrast in the results of the foreign market taking a nose-dive which seem to perfectly represent the sad reality of the divisions that continue to widen among the Filipino people and those seated in the government, especially that the President is starting a friendship with China. What happens next in the remaining months of 2016 remains to be seen, with the recent impact of super typhoon ‘Lawin’ hitting the majority of the southern parts of the country. The question, will the Philippines remain the top GDP earner in 2016, remains to be seen.
A separate news states that this last quarter of 2016 had seen a 6.5% growth, which is faster than the last quarter of 2015, but is the slowest growth rate in 2016 among all quarters of the said year.5
Source: 1)investopedia.com/terms 2) rappler.com/business/economy-watch/143412-gross-domestic-product-philippines-q2-2016 3) philstar.com/headlines/2016/10/10/1632121/us-eu-investors-put-philippine-plans-hold 4) time.com/4475438/philippines-duterte-stock-market-equities-economy/ 5) http://business.inquirer.net/217003/q3-gdp-growth-seen-at-6-5