According to the Central Intelligence Agency (CIA) World Factbook, the Philippines is the 30thlargest economy in the world (in terms of 2014 estimated GDP at purchasing power parity) among the 230 countries the CIA monitors.
The top three largest are China (USD17.63 trillion), European Union (USD17.61 trillion) and the US (USD17.46 trillion). While the Philippines is indeed the 30th largest, its GDP at purchasing power parity is only at USD0.69 trillion. It is true the Philippines’ economy is larger than those of Switzerland (USD0.44 trillion) and Sweden (USD0.43). However, the GDP per capita of the two other countries are USD55,200 for Switzerland and USD44,700 for Sweden. In contrast, the GDP per capita for the Philippines is only USD7,000.
As defined in the CIA World Factbook:
“Gini index measures the degree of inequality in the distribution of family income in a country. The more nearly equal a country’s income distribution, the lower its Gini index, e.g., a Scandinavian country with an index of 25. The more unequal a country’s income distribution, the higher its Gini index, e.g., a Sub-Saharan country with an index of 50. If income were distributed with perfect equality the index would be zero; if income were distributed with perfect inequality, the index would be 100.”
Sweden scored the lowest Gini index at 23 (2005). Switzerland had 28.7 (2012 estimate). The Philippines had 44.8 (2009). And even if you say that the comparison is unfair because Sweden and Switzerland have low population numbers and are more advanced than the Philippines, take a look at the gini index of the country’s closest neighbours:
Country Gini Index Date of Information
Thailand 39.4 2010
Vietnam 37.6 2008
Indonesia 36.8 2009
Taiwan 34.2 2011
No less than the IMF is saying that the Philippines will continue to be the exception in Asia with projected economic growth rates of 6.7% for 2015 and 6.3% for 2016. Others say that the country will be in a demographic sweet spot for the next 35 years where most of the population will be productive. Still others say that the growth opportunities for the Philippines have never been better.
But many Filipinos still contest that only the rich get richer.
There is a solution to the inequitable distribution in the Philippines and that is to invest. By investing, people can ride on the fortunes of the rich. And the best way to invest is to participate in the capital markets of the country: money market, bond market and stock market (listed in ascending order of risk and potential return). And while investing does require sizeable funds, expertise and time for active management, the more convenient, effective and affordable way is to simply have professionals manage money through variable unit-linked insurance, mutual funds and unit investment trust funds.
There is really no point in just complaining about the lack of trickle-down effect of the country’s economic growth.
Instead of getting mad, get invested. Investing is the bullet train to financial freedom.
Photo source: http://cdn.wallstcheatsheet.com
(Originally written by Efren Ll. Cruz, RFP at http://www.savingstips.com.ph)
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