The Philippine economy has maintained a steady gross domestic product (GDP) growth of 5.6% in 2024—the second fastest in ASEAN—despite multiple challenges. The outlook for 2025 also remains bullish, fueled by lower inflation and higher consumption and investments.
As of writing, the Philippines currently ranks as the 8th fastest-growing economy last year compared to the 46 countries that have released their fourth-quarter GDP data.
“While this is below our target, we continue to be one of the fastest-growing economies in both the region and the world. This is despite external and local challenges such as extreme weather events, geopolitical tensions, and subdued global demand,” Finance Secretary Ralph G. Recto said.
“We remain optimistic about our outlook for 2025. 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 materializing, especially with the strong business interests we attracted from our recent investor engagements at the World Economic Forum and Philippine Business Dialogue in the Netherlands,” he added.
In 2024, services and industry remained the main drivers of growth, expanding by 6.7% and 5.6%, respectively.
This was mainly due to stronger wholesale and retail trade, which grew by 5.6% and contributed 1.1 percentage points (ppt) to GDP; financial and insurance activities (9.0% yoy and 0.8 ppt); and professional and business services (7.9% yoy and 0.5 ppt).
Construction also had a robust full-year growth performance of 10.3%, along with the rebound of the manufacturing sector (3.6% yoy).
However, these were partially offset by the 1.6% contraction in the agriculture sector due to the impact of six successive typhoons, which disrupted crop production, livestock, and fisheries.
Despite this, domestic demand remained strong with a 5.7% growth in 2024 as all major expenditure items showed robust expansions.
With a decelerating inflation rate and lower interest rates, household consumption rose by 4.8% last year. The acceleration was also supported by a moderate uptick in demand for essential services despite the reduced growth in spending on restaurants and hotels and on miscellaneous goods and services.
Government spending likewise rose by 7.2% in 2024, driven by larger personnel services expenditures, including the release of bonuses, and increased public infrastructure spending. The implementation of the Department of Social Welfare and Development’s (DSWD) protection programs as well as financial aid for rice farmers also contributed to the growth.
Meanwhile, gross capital formation grew by 7.5% driven by both public and private construction activities. Improvements in exports (3.4%) and imports (4.3%) of goods and services were also recorded last year despite global trade protectionist policies.
Economic Outlook for 2025
As domestic and external headwinds persist in 2025, the government will continue implementing growth-enhancing strategies to ensure that the Philippines remains on track with its medium- to long-term goals set under the Philippine Development Plan (PDP) 2023-2028.
Key domestic and external risks in 2025 include weather disturbances, extreme natural disasters, an acute and protracted global economic slowdown in major economies, ongoing geopolitical tensions and conflicts, trade wars, and protectionist trade policies, especially in the US.
The PHP 6.326 trillion national budget for 2025 is the government’s most powerful tool to counter risks and deliver the biggest growth and economic benefits to Filipinos. President Ferdinand R. Marcos Jr. continues to lead meetings to identify gaps in the appropriations of national government agencies, ensuring that funds are used effectively for maximum impact.
Meanwhile, the extension of the Rice Competitiveness Enhancement Fund (RCEF) until 2031 and its increased allocation of PHP 30 billion will enhance local rice production, support rice farmers, and stabilize rice prices, in light of potential weather disturbances that may affect local agricultural production. The government is also intensifying efforts to control African Swine Fever (ASF) and administer vaccines to mitigate disruptions in pork supply.
The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act is expected to effectively position the Philippines as a key investment destination under the Trump administration, attracting more investments from companies diversifying their locations.
The interim Implementing Rules and Regulations (IRR) of CREATE MORE were issued in December 2024, and the final IRR is set to be signed in February 2025.
To further boost the tourism sector, the passage of the value-added tax (VAT) refund for non-resident tourists is seen to encourage foreign spending on local goods and services.
To sustain gains in the labor market, the National Economic and Development Authority (NEDA) is finalizing the Trabaho Para sa Bayan (TPB) Plan or the administration’s 10-year employment roadmap. This initiative will focus on attracting investments, improving workforce employability, and enhancing labor market governance, with the goal of generating at least three million jobs by 2028.
