Below govt target but up from 5.5% in 2023
Philippine gross domestic product (GDP) grew 5.6 percent in 2024, missing the government’s growth target of 6 to 6.5 percent for the full year despite a fourth-quarter sequential improvement.
Last year’s economic performance gained pace from 5.5 percent in full-year 2023, the Philippine Statistics Authority (PSA) reported in a press conference in Quezon City yesterday.
For the fourth quarter of 2024 alone, the economy expanded by 5.23 percent, easing a tad from the pace of the third-quarter growth of 5.24 percent, but slowing much further compared with 5.5 percent recorded in the fourth quarter of 2023.
Data released by the PSA showed the value of goods and services produced by the country last year reached P22.23 trillion, up from P21.05 trillion in 2023. The amounts were valued at constant 2018 prices.
At current prices, the full-year GDP amounted to P26.43 trillion, up from P24.31 trillion in the prior year.
In the fourth quarter, GDP amounted to P6.19 trillion, rising from P5.88 trillion in the year-earlier period.
3rd fastest in Asia
Rosemarie Edillon, undersecretary of the National Economic and Development Authority (NEDA), said in the same briefing that even though the 2024 economic performance fell short of target, the Philippines remains positioned as the third fastest-growing economy in the region, trailing Vietnam’s 7.5 percent and China’s 5.4 percent, but outpacing Malaysia’s 4.8 percent,
“In 2024, we faced numerous setbacks like extreme weather events, geopolitical tensions, and subdued global demand, similar to the challenges we encountered in 2023. This suggests that these conditions may represent the new normal. While some challenges affect the entire economy, others exert pressure on specific sectors,” Edillon said.
“Consequently, our economic performance in 2024 hinged on the impact of these factors on various sectors and whether we can mitigate the negative effects or enable a swift recovery. In a word, it is about resiliency. Therefore, beyond aiming for higher numbers, our focus is on building resilience,” she added.
Statistics Undersecretary and National Statistician Claire Dennis Mapa said that among the major economic sectors, industry and services posted year-on-year growth in the fourth quarter of 2024, with 4.4 percent and 6.7 percent, respectively. The agriculture, forestry, and fishing (AFF) sector posted a year-on-year decline of 1.8 percent.
For the full year of 2024, industry expanded by 5.6 percent and services by 6.7 percent. On the other hand, AFF declined by 1.6 percent.
The industry sector actually performed better compared with 3.6 percent in 2023, but the services sector was down from 7.1 percent last year.
Edillon highlighted the agriculture sector in particular, which experienced setbacks, from late October to mid-November when six successive typhoons struck the country.
“These extreme weather conditions led to a 1.8 percent year-on-year contraction in the AFF sector in the fourth quarter of 2024,” Edillon said.
“The AFF sector, which contributes around 8 percent to GDP and provides livelihood for about one-fourth of the workforce, faced disruptions in crop production, livestock, and fisheries, further compounding its vulnerabilities,” she added.
‘Subdued global demand’
While industry and services drove the economy higher in the fourth quarter of 2024, subdued global demand due to geopolitical tensions and the slow recovery of advanced economies hampered their respective performances, Edillon said.
“In fact, the manufacturing sector only grew by 3.1 percent during this quarter, and in some other industries like semiconductors, they still need to update their product offerings to meet the changing demand,” she said.
According to the PSA, livestock, which contracted by 5.9 percent, was the main reason for the slowdown in the fourth quarter.
“It is clear, then, that the key to economic growth in the new normal is to build resilience and ensure adaptability to changing preferences,” Edillon said, noting the need to diversify sources of growth.
“For inclusive quality employment, we must encourage more investments in sectors that require workers with higher-level skills and further develop an agile workforce. To keep food inflation low and stable, we need to anticipate potential shocks and continue to employ multi-pronged approaches,” the Economic undersecretary said.
On the demand side, the PSA reported the household final consumption expenditure expanded by 4.7 percent in the fourth quarter, slower compared with 5.3 percent a year earlier.
“During the fourth quarter, we had a succession of typhoons, and this one has actually dampened the growth momentum,” Edillon said.
Despite bad weather that dampened many travel plans, there was evidently higher spending on travel, transport, and recreation and culture.
“But still, it was not enough to counter the other slowdown in the other expenditure items,” Edillon said.
In particular, surgin food prices were responsible for discouraging consumption.
“So we’re hoping that this is very temporary, because, as you know, this was when we had very high prices of vegetables,” Edillon said.
What also helped boost the economy were government final consumption expenditure, gross capital formation, exports and of goods and services and imports of goods and services, at 3.2 percent, an improvement from the 2 percent increase in the fourth quarter of 2023, official data showed.
Edillon said the slowdown in gross capital formation had to do with the performance of durable equipment, which posted a slower growth of 0.1 percent in the fourth quarter from 14.6 percent a year earlier.
“In 2023, we actually observed a massive refleeting of our airlines, so that really pushed up the durable equipment spending that time. We were coming from a high base,” she said.
2025 target at 6-8%
This year, the government has a GDP growth assumption of 6 to 8 percent.
“Looking ahead to 2025, we want to regain our growth momentum driven by strategic investments and initiatives designed to strengthen resilience and lay the foundation for long-term, inclusive growth,” Edillon said.
She pointed out that infrastructure development remains a crucial driver of economic recovery and long-term growth, saying that by the end of 2024, seven infrastructure flagship projects (IFPs) have been completed, with other big ticket projects expected to finish in 2025.
“It is essential to collaborate with local government units to ensure the expedited completion of these projects and that these new infrastructures effectively promote growth within their respective areas,” Edillon said.
In response to evolving trade dynamics, Edillon said the country will maximize the opportunities with long-standing partners while expanding new free trade agreements (FTAs).
“We must, for instance, leverage and maximize the Philippines-South Korea FTA and increase investments in post-harvest facilities for bananas and other tropical fruits. The reaffirmed Luzon Economic Corridor partnership with the United States and Japan will further support infrastructure development and market access,” she said.
Meanwhile, Edillon said that to support the agriculture sector’s recovery and resiliency, the Department of Agriculture will fast-track the National Rice Program to achieve 20.5 million metric tons targeted this year.
“We are also investing in much-needed irrigation facilities including large-scale irrigation systems and small-scale irrigation projects for high-value crops,” she said.
The government intends to fully use the higher provision for the Rice Competitiveness Enhancement Fund in improving farm productivity through increased investments in mechanization, irrigation, technology adoption, and climate adaptation strategies.
Edillon said tourism will also play a key role in driving growth.
“The government will explore easing visa requirements and actively participate in initiatives such as the proposed ASEAN common visa policy to enhance visitor inflows. New tourism products, such as those under experiential tourism, are also being developed,” Edillon said.
Investments in digital and physical tourism infrastructure will improve accessibility, particularly in emerging destinations.
These investments are expected to attract a new group of tourists or “the so-called digital nomads,” according to Edillon.
Global shift
Part of the 2025 plan to grow the economy is recognizing the global shift toward a green economy.
Edillon said the government will position the manufacturing sector as a key player in sustainable industries.
“Efforts will focus on expanding the domestic manufacturing base and attracting investments in electric vehicle batteries, electronics, and other green technologies,” she said.
“Price stability remains a priority to sustain domestic demand. We will ensure a stable food supply and prevent unwarranted price increases through strategic trade policies, timely release and distribution of production and post-production support, and proactive measures against hoarding,” Edillon also said.
Meanwhile, reforms in the mining fiscal regime will be prioritized to capitalize on the rising demand for critical minerals, she added.
