Macroeconomics
scoobie
Philippines.pptxPhilippines (GDP)
Paxton Boyd II;
Macroeconomics;
AIU;
18March20;
Introduction
Currently am working with a food processing and selling company best in Dallas, Texas, USA.
The firm deals with perishable and non-perishable products.
The products include; milk, coffee, tea, meat, fish, fruits, cereals, cheese, rice, flour, and wheat products.
The firm was founded after seizing the opportunity that the world’s population is ever growing and food products are basic needs that humans cannot do without.
This is a clear indication that the market share is adequate enough to generate profits.
Therefore, in our expansion plans, we take the gross domestic product metric as a key determinant when in investing a particular nation.
This is because it will show us how the market incomes and standards of living are growing with time.
GDP
Gross domestic value shows the aggregate value of what a nation produces.
It indicates an economy’s size
It helps eradicate double accounting
It is given by;
Personal spending plus investments by businesses plus the expenditure by the government, plus exports minus imports.
The two types of GDP are real and nominal.
GDP growth rates change over time.
The aggregate value generated from the GDP considers all the country’s production regardless of whether they are produced by locals or foreigners.
The real GDP is gotten by removing inflation from the equation because the economy may seem to be prospering and yet it is not. The real GDP is calculated by use of a price deflator. The nominal GDP includes the basic measurements that involve prices. Normally, real GDP is less than the nominal GDP.
A negative growth rate indicates a recession while too high growth rates create inflation.
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GDP in Philippines
Philippines has a population of 105 million.
The yearly GDP rates of increase is 6.7%
It is an investor attracting country.
The businesses have been growing over the years.
The investment levels in the country has ranked it has one of the top five foreign investment hub.
A huge percentage of Philippines general population speak English. This is an advantage to our business because most of our employees are English speakers. However, we also have translators to help us in nations we have or we are planning to invest and yet they do not speak English.
Over the last few years, the country has attracted many investors due to its high GDP growth rates that stand at 6.7% on annual basis.
As per the investment inflows from foreigners in Asia as of 2018, Philippine was ranked 5th. The investors aim at capturing the middle class that is really growing.
The commercial process outsources section has enabled well developed communication and IT systems in the nation and this will help in customer assistance and entry of data.
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Change of Philippines GDP over years according to the world bank
The country’s GDP has grown positively over the years.
According to the world bank, the 2019 GDP was 355.5 billion dollars
The value has grown since 2010 positively.
This is as illustrated by the graph besides. (Kimberly, 2020).
The values are expected to grow even more from 2020 onwards.
The firm having an annual growth rate of 6.7% in the GDP, it has grown its GDP over the years as the figures from the graph indicate. Of the world’s economy, Philippines’ GDP makes 0.29% of the economy.
The GDP indicates the country’s national income and the output in the economy.
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GDP Forecasts
The country’s GDP is expected to grow through to 2020
In the long run, the GDP will still be growing positively that is by the year 2025,
The graph besides indicates the forecasts that have been made since the year 2010 to the year 2025.
The country has achieved these estimates and surpassed most of them by huge figures.
The 2020 Philippines’ GDP is expected to stand at 375.00 billion US dollars. The 2021 GDP is expected to be at 390.00 billion US dollars while this will rise to 420.00 billion US dollars in the year 2022.
The 2025 GDP is expected to be at; 450.00 billion US dollars and above.
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Actual Trends in Philippines GDP over the years
Between the years; 160 – 2019, the country’s average GDP is 86.17 billion US dollars.
The firm between that period had a lowest GDP in 1962.
The highest GDP experienced over that span of time was experienced in 2019.
This is illustrated by the graph besides.
The averaged 1960 to 2019 GDP average for the nation was 86.17 billion US dollars.
It recorded the highest value in 2019 which was 355.50 billion US dollars and the lowest value was experienced in 1962 with a value of 4.40 billion US dollars in GDP between that value.
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Philippines Versus USA
The USA is our home business country and it has a better GDP than the Philippines.
Even the growth Of the GDP over the years has been higher.
Therefore, the consumption patterns will change in both countries. (Praneeth, & Zara, 2019).
The growth of the GDP on annual basis shows a growing pattern of consumption.
The GDP growth will depend on various factors.
The USA has more favorable domestic factors that favor the higher GDP it has as compared to Philippines. The macro factors are very key determinants of GDP growth.
For instance, china’s old population will affect the dividends to the population but the wages will grow, migration to the cities will also grow, the saving rates in house holds will decrease due to increased consumption. India’s expanding middle class will grow the consumption patterns.
The per capita income disposable will grow in the Philippines, Malaysia and Indonesia due to growing labor forces. The growth in technology will ensure effective and efficient delivery of goods and services as they are demanded.
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Global largest Economies
Due to the changes in consumer profiles, consumption is growing in various nations.
The future consumers will be so keen on what they are having.
The domestic firms also play a key role in the growth of a country’s GDP.
As a result, in overall, china, the USA, India, japan, and Germany make the largest economies in the world respectively as of the year 2018 as well as the projected 2019 GDP. (Era, 2018).
Consumer profiles changes over time have led to growth in the GDPs of many nations. Future consumers will be more keen on the sustainability, health and personal needs. The shopping convenience also matters a lot. The influence from the firms and the social communities will have less impact on the purchasing power of consumers.
The local industries will help in disrupting the local markets which is a good thing.
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Questions to Consider in Asia before Investment
What the future looks like?
What are the sustainability levels?
What are the customers needs?
What are the data handling procedures?
How can the firm be better than the competitors?
There are various considerations to be done before investing in Philippines. A future strategy should be developed such that the firms operations in Philippine will be long lived. The business models to be established should be the ones that ensure that there are competitive advantages to be utilized in the future. The tastes and preferences of the customers and their aggregate should be met or else we will lose market to the competitors.
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Transformation in the Job Market
The Asian governments are working towards;
Eradication of poor infrastructure, poverty levels and obstacles on the path of their growths
this will affect the job market and a transformation will be experienced.
Employment rates will grow in many industries.
Some industries that are labor intensive will have low employment levels.
As many governments in the Asia pacific nations are striving towards eradication of poverty and developing their infrastructure systems, the job market is transforming too. Due to the digital changes across the world, job market has experienced shifts in various ways. In some industries like healthcare due to increase in the older population will grow the employment levels, while labor intensive industries like manufacturing will experience reduction in employment levels.
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Sustainability Focus
Business sustainability is a key factor to consider before an investments are made.
The effects of the sustainability will be felt by various economy stakeholder.
Investors will have to play their.
The business sectors are also shifting.
Sustainability has various impacts on the society, economy and the environment. This has accelerated NGOs and governments agendas on development issues. Some sectors like the health, equality, and manufacturing will expand positively.
Most investors in Asia are moving away from primary industries like gas and oil to renewables to address issues of societal and environmental needs.
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Government Balance
The future is changing so should the government settings.
The government laws and policies should be favorable or else their GDPs will deteriorate. (Israel, 2019)>
Some programs like education systems should be reformed.
The technologies and the employment creation opportunities should be balanced.
The future is changing and the governments should be ready to face and accommodate the kind of change that is coming and evolving each day.
Government policies and regulations should favor investors with trade reforms that will promote sustainable social and financial growth in advocating for positive partnerships. Education reforms to instill skill based education in graduates will enable them perform greatly in the market place.
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Importance of GDP
Measures the size of economies.
It measures the standards of living of people in a given country.
It creates employment opportunities.
It attracts investors to a country which is a great sign in terms of meeting customers demands and offering employment opportunities.
Generation of more revenues for the government.
Growth rates that are positive indicate positively growing economies. This is mostly shown by real GDPs. When measured, clarity is gained on whether the economy is having production of more services and goods or if the economy may be contracting due to reduced outputs.
Increased production means that purchases being made are also high because there is enough money. It also indicates that firm will need more labor for production and thus creation of employment opportunities. Increased investments will indicate that the government will be generating more taxes from the business thus offering the best services to its citizens.
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Conclusion
GDP is a key measure to use in determining any kind of investment.
The metric from the above analysis clearly indicates that it takes into account a lot of economic factors that are crucial in determining the country’s standards of living.
Higher GDPs show that the incomes generated by the people are high and thus more purchases will be made.
Since our business is dealing with basic needs; food staffs, then increased incomes to the people will mean that more food staffs will be needed.
Better standards of living contribute to high population because fertility rates are high and this means increased market share.
References
Era, P. C. (2018). Economy of the Philippines. Population, 6, 4.
Israel, D. C. (2019). Philippines–China Trade, Economic Cooperation, and Prospects for Policy Research. China's Belt And Road Initiative And Building The Community Of Common Destiny, 5, 83.
Kimberly, A. (2020). Gross domestic product and how it affects you. Retrieved from; https://www.thebalance.com/what-is-gdp-definition-of-gross-domestic-product-3306038
Praneeth, Y. & Zara, I. (2019). IN 2020 Asia will have the world’s largest GDP. Here is what it means. Retrieved from; https://www.weforum.org/agenda/2019/12/asia-economic-growth/
