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Overview

The Ramos administration set out a program of economic liberalization and privatization which resulted in a dramatic change to the Philippines economy since 1993. The economy is diverse with the service sector contributing 53%, industry 31% and agriculture 16% of GDP in 2000. Although agriculture's contribution to GDP has declined in recent years, it continues to account for approximately 45% of the workforce.

The Philippines escaped the worst of the Asian financial crisis as it had already been through the IMF process and had the appropriate structures in place. GDP grew by 3.2% in 1999 on the back of strong exports and sustained agricultural growth, reversing a decline of 0.5% in 1998. However, the economy has suffered badly as a result of the political crisis and the process to impeach President Estrada. Foreign
investment dropped forcing the peso to a record low in January 2001 of 55 pesos to the US dollar. In an attempt to defend the peso, the Philippine Central Bank encouraged commercial banks to raise interest rates.

Following her appointment in early 2001, President Gloria Macapagal-Arroyo, a trained economist, restored macroeconomic stability. The peso recovered, interest and inflation rates are at their historic lows. Nonetheless, the combined effect of domestic peace and order and the slowdown in the world economy took its toll on the country as much needed foreign investments declined. In 2002, GDP grew by 4.6%, exceeding official forecasts and the strongest recorded since the 1997 crisis.
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