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PH economy maintains steady growth in 2024 despite challenges; 2025 outlook remains bullish

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Recto. (PHOTO FROM THE DOF)

The Department of Finance reported Thursday that the Philippine economy recorded steady growth in 2024, with gross domestic product expanding by 5.6 percent — the second-fastest pace in the Association of Southeast Asian Nations — despite multiple challenges.

As of now, the Philippines ranks as the eighth fastest-growing economy in 2024 among the 46 countries that have released their fourth-quarter GDP data.

“While this is below our target, we remain one of the fastest-growing economies in both the region and the world, despite external and domestic challenges such as extreme weather events, geopolitical tensions, and subdued global demand,” Finance Secretary Ralph G. Recto said.

“We remain optimistic about our 2025 outlook. A lower inflation rate gives us more room to ease interest rates, which will further boost consumption. With CREATE MORE taking full effect, we anticipate more investments, especially with the strong business interest we attracted at the World Economic Forum and the Philippine Business Dialogue in the Netherlands,” he added.

In 2024, the services and industry sectors remained the main drivers of growth, expanding by 6.7 percent and 5.6 percent, respectively.

Key contributors included wholesale and retail trade, which grew by 5.6 percent and contributed 1.1 percentage points to GDP; financial and insurance activities, which expanded by 9 percent year over year, contributing 0.8 percentage points; and professional and business services, which grew by 7.9 percent year over year, adding 0.5 percentage points.

Construction recorded a robust full-year growth of 10.3 percent, while the manufacturing sector rebounded with a 3.6 percent year-over-year increase.

However, these gains were partially offset by a 1.6 percent contraction in the agriculture sector due to six successive typhoons, which disrupted crop production, livestock, and fisheries.

Despite this, domestic demand remained strong, growing by 5.7 percent in 2024, with all major expenditure items showing solid expansions.

With a declining inflation rate and lower interest rates, household consumption rose by 4.8 percent last year. The acceleration was supported by increased demand for essential services, though spending growth on restaurants, hotels, and miscellaneous goods and services slowed.

Government spending also rose by 7.2 percent, driven by higher personnel services expenditures, infrastructure investments, and the implementation of social protection programs, including financial aid for rice farmers.

Gross capital formation, a measure of investment activity, increased by 7.5 percent, fueled by both public and private construction. Meanwhile, exports and imports grew by 3.4 percent and 4.3 percent, respectively, despite global trade protectionist policies.

Economic outlook for 2025

As domestic and external challenges persist, the government will continue implementing growth-enhancing strategies to ensure the Philippines remains on track to meet its medium- to long-term goals under the Philippine Development Plan 2023-2028.

Key risks in 2025 include weather disturbances, natural disasters, a potential global economic slowdown, ongoing geopolitical tensions, trade conflicts, and protectionist policies, particularly in the United States.

The P6.326 trillion national budget for 2025 serves as the government’s primary tool to mitigate these risks and maximize economic benefits for Filipinos. President Ferdinand R. Marcos Jr. continues to lead efforts to ensure national funds are allocated effectively for maximum impact.

To bolster the agriculture sector, the government has extended the Rice Competitiveness Enhancement Fund until 2031 and increased its allocation to P30 billion. This aims to improve local rice production, support farmers, and stabilize rice prices amid potential climate-related disruptions. Efforts are also underway to control African swine fever and expand vaccination programs to secure pork supply.

The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act is expected to strengthen the Philippines’ position as a key investment destination. The interim implementing rules and regulations were issued in December 2024, with the final version set for signing in February 2025.

The government also aims to boost tourism by implementing a value-added tax refund for non-resident tourists, encouraging foreign spending on local goods and services.

To sustain job creation and labor market gains, the National Economic and Development Authority is finalizing the Trabaho Para sa Bayan Plan, a 10-year employment roadmap focused on attracting investments, improving workforce skills, and enhancing labor governance. The initiative aims to generate at least 3 million jobs by 2028. — DOF

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