Context
The Philippines in Southeast Asia has a population of around 109 million people, making it the world's twelfth most populous country. It is considered to be an emerging market and a newly industrialized country. which has an economy transitioning from being based on agriculture to being based more on services and manufacturing.
GDP Analysis
Nominal GDP and real GDP both increased year-on-year from 2010-2019. In 2020 we saw a real-GDP decrease for the first time in 10 years due to the Covid-19 pandemic. It was a relatively large decrease of 9.6% that real-GDP levels to pre-2018 levels.
Real GDP per capita reduced by an even greater degree (12.1%), levels not seen since before 2017. This will be due to an increase in population because GDP per capita is just real GDP divided by the population. So assuming a constant population then the percentage change in real GDP should be the same as the percentage change in real GDP per capita. The population of the Philippines is a topic I plan to explore in more detail in a later post. This indicates a potential severe drop in wellbeing for Filipinos. The effects of the pandemic have not been equitable between the haves and the have-nots, so the pandemic may have widened inequality in the Philippines, this is another topic I will explore in a later post.
Table 1: Nominal GDP, Real GDP, Real GDP % Change & Real GDP per capita.
Source: Philippines National Statistics Authority: Time Series Data
https://psa.gov.ph/national-accounts/base-2018/data-series
Figure 1: Real GDP per capita (plotted on MS Excel)
Extension Exploration GNI Per Capita Analysis
Table 2: GNI and GDP (nominal and real [2018 prices]) - Screenshot
Source: Philippines National Statistics Authority: Time Series Data
https://psa.gov.ph/national-accounts/base-2018/data-series
GNI per Capita Analysis:
GDP is the total market value of all finished goods and services produced within a country in a set time period. GNI is the total income received by the country from its residents and businesses regardless of whether they are located in the country or abroad.
GNI per capita is consistently about 10% higher than GDP per capita, whether looking at real or nominal figures. This is mostly due to the prominence of OFW (overseas Filipino workers) who send remittances back to their families. For this reason GNI per capita arguably a better indicator of living standards in the Philippines as it more accurately measures the amount of income that households have available to spend on goods and services. The fall in real-GNI per capita in 2020 (12.6%) is even greater than the fall in GDP per capita (12.1%).
Widening the lens (looking back at GNI growth since 1980)
Figure 2: GNI per capita growth (Gapminder)
Data Source: https://www.gapminder.org/tools/#$chart-type=linechart
I decided to visualise some of the growth data using the tool Gapminder trends. Note that 2020 data is not yet available here. However, I found that GNI per capita had actually been increasing year-on-year (this is shown as annual growth above 0%) not just since 2010, but all the way back to 2001. I also noticed a large drop of around 12% in 1985-1986 (see the chart below). This was around the time of the EDSA revolution. I would like to learn more about the events surrounding this period of history that led to such a decrease in real incomes. Coincidentally, the drop in 2020 is almost identical in size to the decline seen around 35 years ago. History shows us that average incomes were able to recover quickly, as GNI per capita grew again year-on-year after 1986. Will we see a similar bounceback post-pandemic or will the effects be longer-lasting? We will have to wait and see…