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Economic Context

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The Philippines is a lower-middle-income country with one of the fastest growing economies in Asia. It is on track to become an upper-middle income country in the coming years.[1]

Economic Growth and Poverty Reduction Pre-Pandemic

In the years leading up to the COVID-19 pandemic, the country was making impressive strides in eradicating poverty and gross domestic product (GDP) growth rate was averaging at 6.6 per cent from 2016 to 2019.[2] Supported by a steady annual growth rate of more than 6 per cent from 2012 to 2019, and as noted by the World Bank, “the country [has been] gearing towards massive economic lift and moving towards inclusive growth”.[3] Substantial poverty reduction figures are attributed to factors including high growth rates and structural transformation,[4] and the continued and expanded social assistance through the conditional cash transfer programme known as the Pantawid Pamilyang Pilipino Program (4Ps Program).[5]

Aggregate indicators at the national levels demonstrate positive development progress in the country. However, inequalities remain. The Gini coefficient is recorded 40.7 in 2021, well above figures of its Association of Southeast Asian Nations (ASEAN) neighbours like Thailand and Indonesia. Disparities in overall poverty incidence exist among rural and urban, geographic regions such as BARMM with highest 37.2 per cent compared to national incidence rate of 18.1 per cent in 2021 according to Philippines Statistics Authority.[6]

Impact of the COVID-19 Pandemic

In March 2020, however, severe lockdowns imposed by the government due to the onset of the COVID-19 pandemic set back the gains in addressing income inequality and economic growth.[7] GDP annual growth rate dropped to 9.6 per cent in 2020, and Philippines fell into its first recession since the 1997–1998 Asian Financial Crisis. Pandemic containment measures and declines in consumption and investment were only partly offset by higher government spending particularly on social assistance and health services. As restrictions eased and the COVID-19 vaccination roll out accelerated, the economy rebounded in 2021 to a GDP annual growth rate of 5.6 per cent and most recently recorded in 2022 at 7.6 per cent.[8]

Economic Sectors and Contributions

The Philippines’ economic growth is propelled by its large service sector which contributes 60.2 per cent of total GDP; followed by industry, with 57.6 per cent of total employment; and agriculture, at 43 per cent of exports. The industrial sector generates significant economic outputs and over half of exports, while the agriculture sector remains a major employer and land user.


[2] World Bank Database, accessed September 19, 2023.

[3] World Bank Group. (2022). Poverty & Equity Brief Philippines.

[5] Government of the Philippines. (n.d.). Pantawid Pamilyang Pilipino Program

[6] Philippine Statistics Authority. (2022). 2021 Full Year Official Poverty Statistics. 

[7] World Bank Group. (2022). Poverty & Equity Brief Philippines.