National Income of Philippines

After the Philippines’ political independence in 1946, in the 1950s the country embarked on an industrialization drive. Between 1950 and 2006, the Philippines Gross Domestic Product(GDP), expressed in 1985 prices, expanded 11.2 times at an average growth of 4.4% each year. But the growth was not always even. The economy shrunk in 1984-1985, 1990 and 1998.

 

On the supply side, the three major sectors (agriculture, industry and services) grew steadily during the 1950s, 1960s and 1970s. But the economic crises in the mid-1980s, early 1990s and late 1990s slowed growth considerably. During the recession in the early 1980s, industry was the hardest hit as the growth rate for the period slipped to 0.6 % from 7.9% in the previous decade. Industry recovered in the 1990s and stabilized in the 2000s, but services proved to be the main contributor to growth starting in the 1980s.

 

In the 1990s,agriculture contributed 12.9% to GDP growth, industry 35.3% and services 51.9%.During 2001-2006,agricultures average contribution to GDP growth increased to 15.9%,that of industry decreased to about 22.6%,while that of services increased to almost 61.5%.

 

In the course of economic development, the share of agriculture to real GDP is expected to decline. Industry is normally expected to pick up the slack. That did not happen in the Philippines. The share of industry was highest in the 1960s and 1970s as import substitution policies, which were oriented mainly toward the domestic market, extended high rates of effective protection to local industries against imports.

 

In the 1980s, industries share began to decline. In 1986, industry’s share to real GDP was 35%, in 2006, the share had dropped to 23.5%.The biggest subsector in industry is manufacturing. In 1986, manufacturing share of real GDP was 24.37%, this fell to 24% in 2006. Food processing is the most important manufacturing subsector.

 

Due to the services sectors high growth rates, its share in GDP increased and exceeded that of industry starting in the mid 1980s. In 1986, services share was 40.6%, in 2006 this had risen to 48.7%.Trade, both retail and wholesale was the biggest subsector in services. In 1986, trades share in real GDP was 14.7%, this improved to 16.9% in 2006.Other than government services, all subsectors of services (such as transport, telecommunications, finance and private services) were part of the economic expansion.