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. 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. Growth contracted significantly in 2020, driven by heavy declines in consumption and investment growth, and exacerbated by the slowdown in tourism and remittances. However, the COVID-19 pandemic and community quarantine measures imposed in the country have severely impacted economic growth and poverty reduction. 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. The Philippine economy has also made progress in delivering inclusive growth, evidenced by a decline in poverty rates and its Gini coefficient. Business activities are buoyant with notable performance in the services sector including business process outsourcing, real estate, tourism, and finance and insurance industries.
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. Average annual growth increased to 6.4% between 2010-2019 from an average of 4.5% between 2000-2009. The Philippines has been one of the most dynamic economies in the East Asia Pacific region.
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