Philippines: Macroeconomic Country Outlook
- According to GlobalData, the country’s economic growth is forecast to expand by 7.1% in 2022 and an annual average growth rate of 6.1% during 2023–24.
- The Philippines was ranked 63rd out of 152 nations in the GCRI Q2 2022.
- According to GlobalData, the services sector grew by 5.5% in 2021, with easing of restrictions. In 2022, the sector is forecast to expand by 6.1%.
The Asian Development Bank and the World Bank expects the Philippines’ economy to grow at a robust rate despite the risk of new COVID-19 infections, supply chain disruptions, and the Russia-Ukraine crisis. The ADB forecasts the Philippine economy to grow by around 6% in 2022. Huge spending on infrastructure and high vaccination rate are set to aid economic recovery. More than 5% of GDP in public spending on infrastructure this year will boost businesses and aid economic growth. However, in the short-term, supply chain disruptions and rise in oil prices amid the Russia-Ukraine war might impose inflationary risk. Public investment and increased consumer demand are expected to spur growth in 2022.
Key findings
- Economy on recovery path: In December 2021, the World Bank approved a $600 million loan to support the Philippine government with the country’s competitive and resilient recovery. These reforms are crucial to address immediate and long-term barriers to growth, paving the way for inclusive economic recovery. According to the Philippine Statistics Authority, the Philippine economy expanded by 8.3% in Q1 2022, since relaxed pandemic restrictions pushed consumption. According to GlobalData, the economy grew by 5.1% in 2021 and forecast to grow by 7.1% in 2022.
- Digital transformation: The COVID-19 pandemic has highlighted the importance of digital ecosystem for rapid delivery of services and relief to its people. In June 2022, Digital bank ING Philippines launched its security education campaign, namely SimplySecuredWithING, to encourage online banking adoption in the country. Moreover, the campaign seeks to ease any apprehension the public still has about doing financial online transactions. In June 2022, the Department of Information and Communications Technology (DICT) of Philippines enhanced Public Key Infrastructure (PKI), which enables users of public network, such as the Internet, to securely exchange private data. Additionally, it would also build trust in the government by ensuring secure and reliable online transactions.
- The Philippines was ranked 95th out of 190 countries in the World Bank’s doing business ranking in 2020: In the 2020 World Bank’s Doing Business report, the Philippines scored 62.8 out of 100 in terms of the ease of doing business. In order to start a business in the Philippines, it takes 13 procedures and 33 days, compared to the East Asia and Pacific average of 6.5 procedures and 25.6 days. The Philippines was ranked 32nd in terms of getting electricity and 65th in terms of resolving insolvency. However, it was ranked 171st in terms of starting a business and 152nd in terms of enforcing contracts.
- Human rights program: In July 2021, the Government of Philippines and the United Nations launched a joint human rights program, which aims to address human rights violations and accountability failings in the country, reflecting domestic and international concerns about “drug war” killings. On September 15, 2021, the International Criminal Court (ICC) agreed to open a formal investigation on crimes against humanity in the Philippines. According to the Human Right Watch, the country witnessed killing of more than 6,190 people during police operations from 2016 to August 2021. According to the Department of Justice, in September 2021, a panel in the country started investigation of 52 cases involving 154 police officers.
- Philippines’ stance on Russia’s invasion of Ukraine and impact on the country: Philippines condemned Russia's invasion of Ukraine and supported a resolution at the UN General Assembly for Russia to withdraw its troops from Ukraine. Moreover, the country also called for assistance commensurate with the growing humanitarian crisis in order to provide safe access to humanitarian assistance for Ukraine. The ongoing conflict between Russia and Ukraine and soaring fuel prices in the global market are affecting many countries in the world, including the Philippines. Bilateral relations between the Philippines and Russia have improved, however, Russia included the Philippines in the list of unfriendly countries.
- Step toward renewable energy in the country: In May 2022, the Philippines Department of Energy announced a 2-GW renewable energy auction on June 17, 2022, where 73 projects qualified to bid for the 2,000 megawatts of renewable energy (RE) capacities. The energy department of the country scheduled the award of 20-year power supply contracts to the winning RE bidders to deliver energy from December 26, 2022, to December 25, 2025. The Philippines signed the Clean Energy Demand Initiative (CEDI) letter of intent with various companies, namely Akamai, Amazon, Apple, Ikea, Iron Mountain, Lady Lawyer Foundation, Lululemon, Meta, Ralph Lauren, REI, RIFE International, and We Work during CERAWeek in Houston on May 9, 2022, for clean energy and energy efficiency solutions for the period of 40 years.
Key fundamentals
Sectoral outlook
- Revival for travel and tourism industry: The tourism sector of the country is becoming a major sector in the Philippine economy. In May 2022, the Negros Occidental (one of the most gifted provinces in terms of natural and human resources) provincial government launched its first tourism fair in two years to attract more tourists to recover from effects of the Covid-19 pandemic. In May 2022, Tourism Secretary of the Philippines announced to accept all types of vaccination certificates, regardless of country of origin to encourage more tourists to visit the country. In June 2022, the Department of Tourism (DOT) held a campaign to enhance the tourism industry of the country. In June 2022, the Embassy of Republic of Philippines signed a MoU with the Nepal Association of Tours and Travel Agents (NATTA) for tourism promotion between both the nations. According to the World Travel and tourism council, in 2021, travel and tourism contributed 10.4% to GDP and the sector created 7.8 million jobs, which is equivalent to 17.8% of total jobs. According to GlobalData, international arrivals to the country is forecast to reach 5.6 million in 2022 and 6.8 million in 2023.
- Infrastructure sector to receive increased funding: Investments in infrastructure sector will support long-term economic growth through improved connectivity and help the country overcome the socioeconomic impact of ongoing crisis. In June 2022, the Asian Development Bank (ADB) approved up to $4.3 billion to finance the construction of nearly 55km of suburban railway line connecting Metro Manila with the city of Calamba in the Philippines. Moreover, the project also includes the construction of 18 stations designed to provide safe access for all, including elderly, women, children, and people with disabilities as well as connecting tunnel to allow the operation of direct trains from Calamba to stations on the future Metro Manila Subway system. The construction would strengthen the Philippines’ economic recovery from devastating impact of the COVID-19 pandemic by creating more than 35,500 jobs during construction and over 3,200 permanent jobs during operation. The construction is expected to be operational by 2030. According to GlobalData, the construction sector expanded by 10.8% in 2021 and forecast to grow by 11.6% in 2022.
- Positive outlook for retail sector over next year: As economic growth is expected to rebound in 2022, the household consumption expenditure is also expected to expand at a rate of 8.3%, according to GlobalData. Over the next two years (2023–24), the household consumption expenditure is expected to grow at an annual average rate of 6.3% as the economic recovery strengthens. The rising real household consumption expenditure is likely to boost the retail sector. E-commerce is also expected to grow, due to the expansion of mobile/internet penetration.
GlobalData Country Risk Index (GCRI) – Q2 2022
The Philippines was ranked 63rd out of 152 nations in the GCRI Q2 2022. The country’s risk score is in the manageable risk nations band (40–50). The Philippines' risk score across the major PESTLE parameters as well as the overall risk score (40.7), were lower than the world average (44.0), but higher than the Asia-Pacific region’s (29.0). The country secured low risk on macroeconomic (32.1) and demographic and social structure indicator (35.1) compared to the World, however higher than the Asia-Pacific region on the same indicators in Q2 2022.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. Asia-Pacific nations in this publication include China, Malaysia, Thailand, Indonesia, Singapore, Australia, Vietnam, the Philippines, and New Zealand.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Macroeconomic Outlook Report: Philippines
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