The World Trade Organization (WTO) commenced its sixth Trade Policy Review of the Philippines, scheduled for June 24 and 26, 2026.
The review evaluates the country’s trade policies, practices, and economic performance based on comprehensive reports prepared by both the WTO Secretariat and the Philippine government.
Trade Policy Reviews are a fundamental transparency mechanism within the WTO, enabling member states to collectively examine, question, and exchange views on each other’s trade frameworks to foster a robust and predictable global trading environment.
Key highlights of the review period (2018–2025)
1. Robust growth and significant poverty reduction
International trade remains a critical engine for the Philippines’ economic development and social mobility. During the review period, trade in goods and services consistently accounted for more than 60% of the nation’s GDP.
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Income Growth: In 2024, the average wage in export-oriented sectors exceeded the national average by at least 50%, accelerating the expansion of a middle class that now comprises over 40% of the population.
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Poverty Alleviation: Driven by trade-linked opportunities, the national poverty rate plummeted from 26.3% in 2015 to 15.5% in 2023.
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Economic Milestones: Real GDP grew at an average annual rate of approximately 5%. By 2025, GDP per capita reached USD 4,279 (up from USD 3,280 in 2018), bringing the Philippines closer to the World Bank’s threshold for upper-middle-income economies.
2. Overcoming high logistics costs via “Build Better More”
The review notes that the Philippines’ unique archipelagic geography imposes substantial logistical hurdles, with trade costs sitting 20% higher than the ASEAN average and accounting for 27% of retail prices. Additionally, as a net importer of food and energy, the country remains exposed to external inflationary shocks.
In response, the Philippine government has successfully implemented sweeping supply-side reforms:
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Infrastructure Spending: Under the flagship “Build Better More” program, the government has targeted annual capital spending on connectivity infrastructure at 5-6% of GDP from 2022 to 2028.
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Regulatory Reforms: Key actions included easing foreign equity restrictions, streamlining customs procedures, removing quantitative restrictions on rice imports, and establishing a national competition policy.
3. Digital services and the evolution of AI
The services sector remains the bedrock of the Philippine economy, contributing 63% of GDP and 45% of total exports in 2025. Services exports expanded by 34% between 2018 and 2024 to reach USD 51.6 billion, spearheaded by the Information Technology and Business Process Management (IT-BPM) sector.
AI Integration: While initial assessments feared job displacement from Artificial Intelligence, early evidence indicates that AI is augmenting productivity rather than replacing workers. Notably, market research indicates that AI integration helped boost revenues in the BPO segment by up to 150%.
Additionally, personal remittances from overseas Filipino workers continue to act as a primary economic pillar, representing 8.5% of GDP in 2025.
4. Electronics and global value chains (GVCs)
While merchandise exports grew more modestly (8% over the review period), they experienced a powerful surge in 2025, reaching USD 83.8 billion—a 15.2% year-on-year growth driven by global AI investments.
The Philippines remains a critical hub in the global electronics supply chain:
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The nation accounts for approximately 10% of global output in the assembly, testing, and packaging (ATP) segment of the semiconductor industry.
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Products covered by the Information Technology Agreement (ITA)—predominantly integrated circuits and semiconductor sensors—made up over 60% of total goods exports in 2024.
5. Core trading partners
The United States maintains its position as the Philippines’ largest single export market, absorbing 16.6% of merchandise exports and 40.5% of services exports in 2024. Deep trade ties also continue with major East Asian economies, including China; Hong Kong, China; Japan; the Republic of Korea; and Chinese Taipei, reflecting the highly integrated nature of the regional electronics manufacturing pipeline.
