Publications


Business and Economic Update
Issue 01
MACROECONOMIC INDICATOR

We start with a view of the macroeconomic performance of the countries below. While the usual analysis is gross domestic product (GDP) growth over the previous year, we will present this analysis from a slightly different perspective – the expansion of the size of their GDP over the past two decades.

Here are two parallel tables. On the left is GDP size in current, nominal values and on the right is GDP based on purchasing power parity (PPP) valuation. The latter is used by many economists to make a comparable valuation of economic output. A $100 in the US, UK or Hong Kong can buy less goods and services than the same $100 in the Philippines, Thailand, China or India.

Table 1. GDP size in nominal and PPP valuation, in Billion Dollars

GDP size in nominal and PPP valuation, in Billion Dollars

In nominal values, the Philippines is the world’s 40th largest economy with a GDP size of $285 billion in 2014. In PPP valuation of GDP though, the Philippines is the world’s 30th largest economy in the world with a GDP size of nearly $700 billion. What does it imply?

It means two things. One, the Philippine economyic output on average was almost doubling every decade. And two, if such trend continues, the Philippines would have a GDP size of around $1.4 trillion (PPP values) by 2024 and make it as the 26th- or 25th largest economy in the world. And that means a huge market of producers and consumers.

Notice also the primacy of many Asian economies. In GDP size by PPP values, four of the top 10 largest economies in the planet are Asians – China, India, Japan and Indonesia. Five other Asian economies including the Philippine land in the top 30. For the 10 ASEAN countries in particular, six of them now belong to the top 40 largest economies in the world.

A note on GDP:

  1. It is the value of flow of goods and services in a country in a given year, and not a stock of wealth or accumulated economic output of the country.
  2. It is computed two ways.
    On the demand side Household Consumption (C) + Investments (I) + Government Consumption (G) + Net of exports and imports of goods and services (X - M).
    On the supply side, GDP is the sum of the gross value addes (GVA) of Agriculture, Industry and Services.

    Thus, GDP = C + I + G + (X - M)
                    = GVA Agriculture + GVA Industry + GVA Services

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