The economy of the Philippines was comparatively less affected by the Asian financial crisis of 1998 than its neighboring countries. The country's economy had gone through periods of expansion and depreciation. In 1998, from a 0.6% decline, the country's GDP expanded by 2.4% in 1999 and further by 4.4% in the year 2000. However in 2001, the GDP came down to 3.2% in the perspective of a world economic slowdown. The economy of the Philippines accelerated at a rate of 5.4% in the year 2006 thus indicating the sustained resilience of the services sector, and enhanced exports and agricultural output.
Despite economic growth the country continues to faces problems like higher oil prices, higher inflation and higher rates of interest on its dollar borrowings.
In November 2005, the execution of the expanded Value Added Tax (VAT) helped to heighten confidence in the government's fiscal capacity thus making Philippines, East Asia's best performing currency in 2005-06. By 2009, the government aims to further the economic growth by 9% as part of its projected target, through increased public investment in order to attract foreign capital.
Major Economic Sectors
The major economic sectors of the Philippines are agriculture, services and industry, chiefly food processing, textiles and garments, electronics and automobile parts. The country's major industries are mainly centered in the urban areas around the capital city Manila. With significant reserves of chromite, nickel, and copper, mining in the Philippines also has immense potential.
The agricultural sector in the Philippines, though substantial continues to decline having contributed only 14.2% of the country's GDP which is the lowest compared to the industrial and services sectors. Major agricultural products are rice, sugar, coconut products, corn, bananas, pineapple products, aquaculture, mangoes pork, and eggs. The agricultural sector is subject to low productivity, low economies-of-scale, and insufficient infrastructure.
The industrial sector of the Philippines had accounted for 32.1% of the country GDP in the year 2006. The industrial sector is mainly concentrated in the processing and assembly operations of various consumer products. Some of these include food and beverages, rubber products, tobacco, textiles, clothing and footwear, pharmaceuticals, paints, plywood and veneer, paper and paper products, and electronics. The heavier industrial products comprise of cement, industrial chemicals, fertilizers, iron and steel, glass, and refined petroleum products.
Over the past years the services sector has shown sustained economic growth and accounted for 53.7% of the country's GDP making it the highest contributor compared to the industrial and agricultural sectors. The services sector also employs the highest percentage of the workforce of Philippines. In 2004, it employed 49% of the country's workforce which was way ahead of the other sectors.
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