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The Philippines has been one of the most dynamic economies in the East Asia Pacific region. Average annual growth increased to 6.4% between 2010-2019 from an average of 4.5% between 2000-2009. With increasing urbanization, a growing middle class, and a large and young population, the Philippines’ economic dynamism is rooted in strong consumer demand supported by a vibrant labor market and robust remittances. Business activities are buoyant with notable performance in the services sector including business process outsourcing, real estate, tourism, and finance and insurance industries. The Philippine economy has also made progress in delivering inclusive growth, evidenced by a decline in poverty rates and its Gini coefficient. Poverty declined from 23.3% in 2015 to 16.6% in 2018 while the Gini coefficient declined from 44.9 to 42.7 over the same period.

However, the COVID-19 pandemic and community quarantine measures imposed in the country have severely impacted economic growth and poverty reduction. Growth contracted significantly in 2020, driven by heavy declines in consumption and investment growth, and exacerbated by the slowdown in tourism and remittances. Similarly, the previous trend in real wages, which is expected to have a positive impact on household incomes—particularly those from the lower income groups—has been severely hampered by the impact of the COVID-19, with negative consequences also for poverty reduction in the Philippines.

Nevertheless, the economy has started to recover with a 5.6% year-on-year expansion in 2021, buoyed by public investment and a recovery in the external environment.  With continued recovery and reform efforts, the country is getting back on track on its way from a lower middle-income country with a gross national income per capita of US$3,430 in 2020 to an upper middle-income country (per capita income range of US$4,096–US$12,695) in the short term. The economy is expected to further rebound, drawing strength from the recovering domestic environment with declining COVID-19 cases and wider economic reopening. Still, the economy faces downside risks from the weak external environment, reeling from an expected global growth deceleration, rising inflation, and geopolitical turmoil. The recovery is expected to also have overall positive impact on poverty reduction.

Last Updated: Mar 21, 2022

of all traffic in Marikina City are bicycle users who make use of the city’s bikeways system as part of the Bank-supported Urban Transport Integration Project

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26th Floor, One Global Place 5th Ave. corner 25th St. Bonifacio Global City, Taguig City Philippines 1634
Tel: +632-8465-2500
Fax: +632-8465-2505
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1818 H Street, NW, Washington DC 20433
Tel: +1-202-473-4709