Philippines Economic Forecast

Philippines Economic Outlook

September 21, 2021

After GDP growth rebounded sharply in Q2, largely due to a supportive base effect, the economic landscape appears to have deteriorated in Q3. A surge in daily Covid-19 infections that began in July forced a gradual tightening of restrictions that culminated in a two-week lockdown of the capital in August. The services sector likely fared worse than the manufacturing sector, given its susceptibility to restrictions. That said, the manufacturing PMI slid into contractionary territory in August, on the back of supply chain disruptions and faltering output. Moreover, growth in both exports and imports receded in July–August, indicating deteriorating demand dynamics, while remittance growth hit a six-month low in August, likely inhibiting consumer spending in the period. A sluggish vaccination campaign and shortages of healthcare workers bode poorly for the economy in the final stretch of Q3.

Philippines Economic Growth

GDP growth should gain steam in 2022, boosted by higher consumer spending and an improving external sector, although milder public spending and the ongoing pandemic will likely temper the acceleration. Next year’s election is a key risk, with the president’s decision to stand for vice-president—the presidency is limited to one term—potentially causing political conflict. FocusEconomics Consensus Forecast panelists project GDP to increase 4.6% in 2021. For 2022, they forecast economic growth of 6.8%, which is down 0.2 percentage points from last month’s estimate.

Philippines Economy Data

2015 2016 2017 2018 2019
Population (million)102103105107108
GDP per capita (USD)3,0153,0863,1313,2533,480
GDP (USD bn)306319329347377
Economic Growth (GDP, annual variation in %)6.37.16.96.36.0
Consumption (annual variation in %)6.47.26.05.85.9
Investment (annual variation in %)13.820.910.612.93.9
Manufacturing (annual variation in %)5.26.88.05.13.2
Retail Sales (annual variation in %)-57.310249.012.4-  
Unemployment Rate6.35.55.75.35.1
Fiscal Balance (% of GDP)-0.9-2.3-2.1-3.1-3.4
Public Debt (% of GDP)42.740.240.239.939.6
Money (annual variation in %)9.113.311.68.610.9
Inflation Rate (CPI, annual variation in %, eop)0.72.22.95.12.5
Inflation Rate (CPI, annual variation in %)0.71.32.95.22.5
Inflation (PPI, annual variation in %)-6.7-4.8-0.90.71.6
Policy Interest Rate (%)4.003.003.004.754.00
Stock Market (annual variation in %)-3.9-1.625.1-12.84.7
Exchange Rate (vs USD)46.9349.6050.0152.5050.66
Exchange Rate (vs USD, aop)45.5347.5050.4052.6751.78
Current Account (% of GDP)2.4-0.4-0.7-2.5-0.1
Current Account Balance (USD bn)7.3-1.2-2.1-8.8-0.5
Trade Balance (USD billion)-12.2-26.7-27.4-43.5-40.7
Exports (USD billion)58.857.468.769.370.9
Imports (USD billion)71.184.196.1113112
Exports (annual variation in %)-5.3-2.419.70.92.3
Imports (annual variation in %)8.718.414.217.4-1.1
International Reserves (USD)80.780.781.679.287.8
External Debt (% of GDP)25.323.522.322.822.2

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Philippines Facts

Value Change Date
Bond Yield4.44-4.11 %Dec 27
Exchange Rate50.660.02 %Jan 01

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