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Overview

  • The Philippines is one of the most dynamic economies in the East Asia Pacific region. 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.

    Sound economic fundamentals and a globally recognized competitive workforce reinforce the growth momentum. Having sustained average annual growth of 6.4% between 2010-2019 from an average of 4.5% between 2000-2009, the country is on its way from a lower middle-income country with a gross national income per capita of US$3,850 in 2019 to an upper middle-income country (per capita income range of US$4,046–$12,535) in the near term.

    Real economic growth, however, has been challenged by the COVID-19 (coronavirus) pandemic and the strict community quarantine measures imposed in the country.  Growth contracted significantly in 2020, driven by significant declines in consumption and investment growth, and exacerbated by the sharp slowdown in exports, tourism, and remittances.

    Economic growth is expected to rebound gradually in 2021-2022 assuming a containment of the virus domestically and globally, and with more robust domestic activity bolstered by greater consumer and business confidence and the public investment momentum. 

    In recent years and until the onset of the COVID-19 crisis, the Philippine economy has 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. This increasing trend in real wages, which is expected to have a positive impact on household incomes—particularly those from the lower income groups—has been hampered by the impact of the COVID-19, with negative consequences also for poverty reduction in the Philippines. Resuming growth can hope to reverse this negative impact again. 

    Last Updated: Apr 07, 2021

  • The World Bank Group’s (WBG) partnership with the Philippines spans almost 75 years, providing support to the Philippines’ development programs and projects. Since 1945, it has mobilized funding, global knowledge, and partnerships to support the Philippines’ efforts to alleviate poverty, upgrade infrastructure, improve health, nutrition, and education, strengthen resilience against climate change and natural disasters, promote peace, and enhance global competitiveness. The WBG is an active partner in helping spur private sector growth including in agriculture, expanding engagement with civil society, and promoting peace and development in Mindanao. 

    Since 1962, IFC – a member of the WBG -- has invested more than $3 billion to support more than 100 private sector companies in the Philippines, and provided advisory services focused on climate finance, digitalization, financial inclusion, disaster insurance, enhancing the investment climate, and enabling private sector investments in the country. 

    On December 17, 2019, the World Bank Group’s Board of Executive Directors endorsed a new Country Partnership Framework (CPF) for the Philippines for 2019-2023. The CPF prioritizes investments in human capital (health, education, and nutrition), competitiveness and job creation, peacebuilding, climate and disaster resilience, governance, and digital transformation. 

    The CPF supports a cohesive approach to Mindanao’s development and intensify efforts to engage the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). For instance, the Bank supports projects that strengthen community-driven development including service delivery and linking of remote communities to markets; promote human development; and address drivers of conflict. 

    As of end February 2021, the Bank's active portfolio in the Philippines consists of 16 operations with net commitments of US$5.62 billion, of which 14 are IBRD, two large recipient-executed trust funds and one grant from the Global Environment Facility. Six of these operations provide direct support to COVID-19 response and recovery efforts. The IBRD portfolio spans various sectors: Macroeconomics, Trade and Investment (27%); Social Protection & Jobs (24%); Urban, Resilience and Land (13%); Social Sustainability & Inclusion (13%); Agriculture and Food (10%); Water (4%); Transport (3%); Health, Nutrition & Population (2%); and Energy (1%). 

    The Philippines’ trust fund portfolio consists of 74 active grants with total a commitment of US$175.7 million. These include the two large recipient-executed grants and the GEF grant that is included in the active portfolio. 

    IFC’s strategic priorities in the Philippines include reducing the impacts of climate change, deepening financial inclusion, promoting sustainable infrastructure, and strengthening the capacity of the private sector. This will better support the Philippines throughout the COVID-19 pandemic and help drive inclusive growth during the country’s eventual recovery. 

    This year, the Philippine government has requested support from the World Bank to manage COVID-19 in the short and medium terms. The World Bank has provided financial support through the following: 

    • US$100 Million Emergency COVID-19 Response Project to support the efforts of the Philippines’ Department of Health to increase the capacity of the health system to respond to the crisis.  

    • US$500 million in additional financing for the Emergency COVID-19 Response Project to support the Philippine government’s programs to purchase and distribute COVID-19 vaccines, strengthen the country’s health systems, and overcome the impact of the pandemic especially on the poor and the most vulnerable; 

    Last Updated: Apr 07, 2021

  • Since the Philippines government received its first World Bank loan in 1957, the Bank’s development projects in the country have produced significant results for its people.  In the past three decades, the Bank’s assistance has expanded to a wide range of projects and analytical work, policy advice, and capacity development in support of the country’s development agenda. 

    Highlights of some projects and results: 

    The Philippine Rural Development Project (PRDP) has been helping raise rural incomes, enhance farm and fishery productivity, and improve market access throughout the country since it started in 2015. It has been supporting provincial planning, rural infrastructure, and agriculture enterprise development. It has been using tools such as geotagging, value chain analysis, and expanded vulnerability and suitability assessments to help guide public investments toward a modern, value-chain oriented, and climate-resilient agriculture and fisheries sector. 

    The project has helped support provincial planning for priority agricultural commodities and investments in all 81 provinces of the country. Since 2015, the project has benefitted 372,000 farmer and fisherfolk beneficiaries, 46 percent of whom are female beneficiaries. An additional 378,00 are and will be benefitting from ongoing and pipeline subprojects including water supply and irrigation. The project has also constructed and rehabilitated over 1,000 kilometers of farm-to-market roads (and another 1,100 kilometers are underway). These resulted in reduction of travel time by 33 percent and reduction in transport costs by 22 percent. Results of a household survey indicate that farmers and fisher households benefitting from completed infrastructure and agricultural enterprise subprojects gained 36 percent increase in annual household real income. 

    In 2017, the IFC launched the Philippine typhoon insurance project in 2017 to help protect Filipino farmers and their crops from losses related to typhoons. IFC supported The Center for Agriculture and Rural Development (CARD) – the largest microfinance institution (MFI) in the Philippines, with four million clients – and CARD Pioneer Micro-Insurance (CPMI), a joint venture between Pioneer Insurance and CARD, in the development and administration of crop-insurance products. 

    The typhoon insurance product is the first private sector-led crop insurance policy in the Philippines. To date, 27,000 policies, which are bundled with agricultural loans, have been sold in 12 provinces. The product has an average claims settlement time of two-to-five days, and currently retails with no premium subsidy support from the government. More than 3,000 farmers have received payouts, including 800 farmers hit by Typhoon Ompong in 2018. CPMI is now working with IFC to develop an insurance product for drought-prone farmers, as well as innovative partial stop loss/reinsurance solutions to help expand this nascent market while also keeping premiums affordable. 

    The Participatory Irrigation Development Project (PIDP) has been supporting the improvement of 58 irrigation systems throughout the country. Since it started in late 2009, the project has rehabilitated and modernized irrigation infrastructure that has been serving close to 126,180 hectares, benefiting close to 196,440 farmers and their families. It has also provided organizational development and capacity building activities to more than 924 Irrigators’ Associations. Between 2009 and 2018 when the project closed, the average paddy rice yield of farmers increased 17% from 4.27 metric tons per hectare to five metric tons in the wet season and from 4.48 metric tons per hectare to 2.26 metric tons per hectare in the dry season. 

    The Bank has supported the government’s education agenda through the Learning, Equity and Accountability Program Support (LEAPS) project in the areas of early grade reading and math with a focus on disadvantaged children. The project has benefitted approximately 4.4 million students, teachers, school heads, and other Department of Education staff in terms of improved teaching and learning in reading and mathematics. Specifically, the project has trained approximately 34,000 Grade 1 – 3 teachers and 10,000 school heads in early literacy and numeracy teaching strategies. Good improvements have been recorded in reading and math scores of Grade 2 and 3 students. LEAPS has also successfully helped the Department of Education develop and roll out a department-wide financial management and operations manual—and has trained 14,121 target schools in the new performance incentive scheme. 

    The Social Welfare and Development Reform Project II (SWDRP II) has been supporting the government’s conditional cash transfer program (CCT), known as Pantawid Pamilyang Pilipino Program (4Ps), which helps low-income households invest in the education and health of children up to 18 years old. Given the project’s success, the Bank approved additional financing to SWDRP II for the period 2019-2021. The recently-approved Philippines Beneficiary FIRST Social Protection Project complements the ongoing SWDRP II in supporting the Pantawid Program and helping the government harness digital tools to modernize social protection delivery. 

    The 4Ps helps low-income households invest in the education and health of children up to 18 years old. The program has made significant impacts in reducing total poverty and food insecurity among beneficiaries, and has grown to become one of the largest CCT programs in the world, supporting more than 4.3 million households as of January 2021. The program is being implemented in 146 cities and 1,482 municipalities across 80 provinces throughout the country. 

    The program is estimated to have reduced total poverty in 2017 in the Philippines by 1.3 percentage points: from an estimated pre-Pantawid rate of 19.8% to a post-Pantawid rate of 18.5%. In addition, the program’s poverty focus helped reduce national income inequality by 0.6 percentage point from 46.8% pre-Pantawid to 46.2% post-Pantawid. The 4Ps has increased gross enrollment rates for children ages 12–17 by 4.9 percentage points from a baseline of 80.4%, and by 10 percentage points (from a baseline of 60.8%) for those ages 16-17. 

    The program is also helping to reduce the gender gap in enrollment between boys and girls ages 6–14 by 30%. Pantawid is encouraging poor women to use maternal and child health services, such as antenatal care: nearly 8 in 10 pregnant women of Pantawid households have the recommended number of prenatal check-ups. It also promotes safer birth deliveries performed by doctors and improved children’s access to health care, all of which have positive effects on the long-term welfare of beneficiary households. 

    Most recently, 4Ps played an important role to help low income households better cope with the COVID-19 pandemic. For instance, Pantawid beneficiaries were close to 10 percentage points more food secure than other low income families during the pandemic when about 56% of households in the study reported at least one household member reducing meals in the past 7 days due to lack of resources. Also, 4Ps beneficiaries also maintained a higher likelihood of seeking health care service for their children, even during the COVID-19 pandemic.  

    The poorest communities have benefited from projects that address their priority needs through a community-driven development approach.  By the end of December 2020, the National Community-Driven Development Project (NCDDP) covered a total of 17,674 barangays (villages) in 828 municipalities in 14 regions, benefitting 8.3 million households. It funded a total of 31,054 community sub-projects, all of which have been completed. Around 35.54 percent of the sub-projects done by communities were access services (e.g. village roads, footbridges, footpaths), followed by social services (e.g. day-care centers, classrooms, health stations) at 29.9 percent. A total of 1,890,006 community volunteers have been mobilized with women holding 63% of leadership positions in the community volunteer committees. 

    When the COVID-19 pandemic hit the country, the Department of Social Welfare and Development (DSWD) adjusted the existing Disaster Risk Operational Modality (DROM) guidelines of NCDDP, expanding the menu of sub-projects to support community-based activities in terms of preparedness and/or early recovery/early rehabilitation responses to the pandemic. By the end of 2020, NCDDP implemented the adjusted DROM in 2,158 barangays or villages in 136 municipalities. The Project supported 2,399 community sub-projects in response to the pandemic,  benefiting around 630,884 households. Most of the community sub-projects were: (i) establishment or upgrading of community facilities to serve as isolation unit in accordance with the DOH protocols; (ii) provision of additional facilities and/or equipment as well as PPEs to enable the community health workers to detect possible cases of COVID-19; and (iii)  installation of water and sanitation facilities. The DROM for the COVID-19 response also provided temporary employment through a cash-for-work scheme for more than 38,000 community workers (39 percent of who are women).   

    Through the National Roads Improvement and Management Project II, the World Bank has supported the country’s efforts to establish a road management system to ensure the upgrading and preservation of its national road network in an environmentally, socially, and financially sustainable manner. Implemented by the Department of Public Works and Highways (DPWH), the project has improved 295 kilometers and rehabilitated 1,200 kilometers of roads. It has awarded contracts to ensure long-term maintenance of these roads. More importantly, it has helped improve DPWH’s planning procedures and management effectiveness in maintaining the country’s road network. 

    To strengthen the government’s capacity to address disaster risks, respond to and recover from natural disasters, the Bank has provided the Third Disaster Risk Management Development Policy Loan. The financing also supports urgent needs created by the COVID-19 crisis. This is combined with technical assistance to help enhance the capacity of national and local governments in preparing disaster recovery plans and developing strategies to finance recovery efforts. With its global expertise in post-disaster reconstruction, the Bank has been working with the government in helping develop effective disaster recovery programs and building back better infrastructure and communities. The Ready to Rebuild program was launched to train communities to be more prepared – to build a culture of preparedness to help local governments and communities anticipate the impacts of disasters and prepare recovery plans even before disasters hit.   

    The Bank’s assistance has also extended to conflict-affected areas in the country, helping support better governance, access to services, jobs creation, and enhanced citizen security and justice. Supported by a range of development partners, the Mindanao Trust Fund (MTF) aims to improve prospects for peace and development in conflict-affected areas in Mindanao. The Reconstruction and Development Projects, Phase II and III (RDP/2 and RDP/3), funded by the MTF, have improved social and economic recovery, promoted social cohesion and participatory governance through a community driven development approach (CDD) in conflict affected areas of the Bangsamoro Autonomous Region of Muslim Mindanao (BARMM). A total of 30 community infrastructures, 45 livelihood skills trainings, and functional literacy classes in 15 conflict-affected communities were implemented. With these, nearly 30,000 people now benefit from clean water, better roads, more post-harvest facilities, and better access to farming and fishing equipment. The MTFs implementation and design is in close coordination and collaboration with the regional ministries with the aim of mainstreaming the good practices of RDP/2 and RDP/3. Participation of Indigenous Peoples, women, persons with disabilities, and youth were targeted to ensure inclusion.   

    In response to the COVID-19 pandemic, the RDP/3 also supported the construction of health stations across six communities servicing around 13,000 individuals. These facilities provide communities in geographically isolated areas the necessary medical care and services such as isolation facilities and longer term also birthing room, midwife station, small pharmacy, and basic medical equipment.  

    Last Updated: Apr 07, 2021

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LENDING

Philippines: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments



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In Depth

Philippines Economic Update

A biannual publication of the World Bank that summarizes key economic and social developments, important policy changes, and the evolution of external/global conditions.

Results Profiles

Our projects cover education, community-driven development, water and sanitation, and poverty-reduction in Mindanao.

Knowledge for Development Community (KDC)

Get to know the partnership between the World Bank and schools, policy and research institutions.

Realizing the Filipino Dream for 2040

The Philippines Systematic Country Diagnostic identifies a diagnosis of the constraints to the Philippines' achieving its long-term vision of becoming a prosperous middle-class society free of poverty by 2040.

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