Economic and social situation in the Philippines

The Philippines are in a mixed economic and social situationcharacterized by solid growth coupled with considerable structural challenges. The country is considered one of the most dynamic markets in Southeast Asia, but is struggling with profound social problems and extreme vulnerability to natural disasters.

Current economic situation

Growth and macroeconomic development

The Philippine economy shows Robust growth ratesbut regularly misses the ambitious government targets. In 2024, GDP grew by 5.6 percent[1][2], which puts the Philippines at Asia's second fastest growing economy made[2]. The growth target for 2025 was lowered to 5.5-6.5 percent[1][3], after originally aiming for 6-8 percent[4].

The economy is mainly driven by supported by three pillars[5][6]:

• Service sector (60% of GDP): Especially Business Process Outsourcing (BPO), where the Philippines is the global market leader
• Private consumption (76% of GDP): Supported by remittances from 10.3 million foreign Filipinos[7]
• Infrastructure investmentsThe "Build Better More" program with USD 150 billion[8][9]

Foreign trade and international relations

The Philippines have a Structural trade deficit of USD 61.3 billion[10]. China is the largest import partner with 25.6 percent[11], while the USA the most important export market remain[12]. The recently imposed 17 percent US tariffs[13] are weighing on the export economy, although important sectors such as electronics and semiconductors are exempt[1].

The volume of trade with China reached around USD 71 billion in 2024, compared to just USD 21 billion with the USA[14], which illustrates the growing economic dependence on China.

Biggest social challenges

Poverty and extreme inequality

Despite economic growth Poverty and inequality key problems. 15.5 percent of the population live below the national poverty line of 13,873 pesos per month for a family of five[15][16]. The Philippines has the highest Gini coefficient in the ASEAN region[17], with the richest 20 percent earning eight times more than the poorest 20 percent[17].

Particularly affected are rural areas and ethnic minorities. 25 percent of the population live in extreme poverty[18], while the top 0.01 percent control about 46 percent of the national wealth[19].

Natural disasters and climate change

The Philippines is one of the countries most affected by natural disasters worldwide[20][21]. Every year, around 20 typhoons the country[22][23], a quarter of which are destructive. Climate change is dramatically increasing these threats[20][21].

Economic costs of natural disasters[24][25]:

• Annual losses: 1.2 percent of GDP
• Extreme events such as Typhoon Haiyan (2013): up to 4.6 percent of GDP
• Projected total losses by 2100: 6 percent of GDP

Corruption and governance problems

Corruption permeates all levels of society and significantly hinders development. The Philippines ranks 115th place out of 180 countries in the corruption index[26][27]. According to estimates 50 percent of development funds and 25 percent of the state budget lost through corruption[28].

The "Padrino" system (nepotism) dominates politics and administration[27], while 60 percent of corporate taxes are not paid[28]. The government under President Marcos Jr. has introduced reforms, but systemic changes are slow[26].

Social problem areas

Healthcare system

The Philippine healthcare system is Severely underfunded and unevenly distributed[29]. With only one hospital bed per 1,000 inhabitants (OECD average: 5 beds), there is a glaring shortage[29]. Only 50 percent of the population have access to medical care within 30 minutes[29].

There is a "Two-tier system" between private and public healthcare, with quality varying greatly between urban and rural areas[29].

Education and youth problems

The education system suffers from chronic underfunding[30]. Despite nominally the largest budget share, there is a lack of funds for Elementary school, teacher salaries and the renovation of 250,000 classrooms[30].

The teenage pregnancy crisis is particularly alarming[31][32]:

• Every day, 500 girls between the ages of 15-19 become mothers
• 3,343 live births among 10-14 year olds (2023)
• Increase of 6.6 percent in four years[31]

Freedom of the press and human rights

The Freedom of the press is under serious threat. The Philippines ranks 134th place out of 180 countries[33][34]. Since 1986, 156 journalists have been murdered, but only two perpetrators have been convicted[35].

The "Drug war" under former President Duterte cost over 12,000 people their lives[36][37]. Despite the change of government, human rights violations continue, albeit to a lesser extent[37][38].

Economic challenges

Infrastructure deficits

Despite massive investments, the Infrastructure far behind. The Philippines ranks 102nd place out of 141 countries in transportation infrastructure[8]. The "Build Better More" program is intended to close these gaps with USD 150 billion by 2028[8][9].

Central projects[9]:

• Manila Metro Subway (completion 2029)
• 197 Lighthouse projects
• 5-6 percent of GDP for infrastructure annually

Labor market and migration

10 percent of the population work abroad[7][18] to support their families. These "Overseas Filipino Workers (OFW) transfer around 8.9 percent of GDP annually[39], which supports the economy, but also Breaking up families and causing a shortage of skilled workers[7].

The Unemployment stands at 4.48 percent (2025), but Underemployment and informal employment are widespread[40].

Outlook and reform approaches

Short-term forecasts (2025-2026)

Economic growth: 5.5-6.5 percent (2025), 6.0-6.1 percent (2026)[41][42] Inflation2-3 percent, within the target range[41][42] ChallengesUS trade disputes, geopolitical tensions, climate risks

Structural reforms

Economic reforms[43][44]:

• CREATE MORE tax reform to promote investment
• Relaxation of restrictions on foreign investment
• Promotion of free trade zones

Social programs[44][19]:

• Pantawid Pamilyang Pilipino (4Ps) for conditional cash transfers
• Universal Health Care Act
• K-12 education reform

The Philippines are at a critical turning point. While the economic fundamentals are solid and the country is one of the fastest-growing economies in Asia, the massive social challenges, climate risks and governance problems require decisive and sustainable reforms. Success will depend on whether economic growth can be made more inclusive and the structural weaknesses of the state can be overcome.

Nea's comment

The analysis shows how complex the situation in the Philippines is: on the one hand, there is considerable economic growth and a dynamic society; on the other, there are deep social divides, great poverty, massive inequalities and challenges due to corruption and natural disasters. The vulnerability of the people in the face of poverty, a lack of social security and constant environmental hazards is particularly touching.

Despite the successes in economic growth, large sections of the population hardly benefit from this. The common good and human cohesion, such as the "Bayanihan" principle, are still vital for survival, but structural reforms often fall short. Young people, children, rural and indigenous communities are often left behind - that hurts, and at the same time it calls for new, humane solutions.

In the light of Gradido, this results in a dual motivation: on the one hand, to give people hope, meaning and a voice - and at the same time to strengthen communities that build on natural cooperation and mutual support. The resilience that grows from solidarity and participation could become a beacon for a better world, especially in the Philippines.

Together, we can address precisely these issues: With Gradido as a complementary system oriented towards the common good, we can value what creates quality of life, connectedness and participation. It is precisely this potential that we can now continue to develop - lovingly, together and wholeheartedly.