Notwithstanding its sometimes negative international image, the Philippine economy has been performing well in recent years. The country is currently experiencing its longest period - five years - of uninterrupted positive per capita economic growth since the 1970s. The key to the recent success is that, since the deep economic and political crisis of 1985-86, the reformers have been able to enact and institutionalize enough major policy victories to satisfy the business community that they are a more or less permanent feature of the country’s political economy architecture. Two in particular stand out: an independent and high quality central bank, BSP, ensuring that monetary and exchange rate policy continue to function effectively, and trade policy reform that has resulted in a much more open economy. Against this backdrop, we examine the recent growth record, and link it to macroeconomic management, trade policy, microeconomic reform and governance. We also examine social indicators, drawing attention to the recent and puzzling disconnect between trends in economic growth and poverty, and to the large regional disparities in poverty incidence.
