MANILA, Philippines – The Philippine economy grew by 5.6% in 2024, making it the second fastest-growing economy in ASEAN despite external and local challenges, according to the Department of Finance (DOF). The country also ranked 8th among 46 economies that have released their fourth-quarter GDP data for 2024. While this growth rate fell below government targets, Finance Secretary Ralph G. Recto emphasized that the Philippines remains one of the fastest-growing economies globally, demonstrating resilience amid economic uncertainties.
The services and industry sectors were the main drivers of economic expansion last year. The services sector grew by 6.7%, led by wholesale and retail trade (5.6%), financial and insurance activities (9.0%), and professional and business services (7.9%). The industry sector expanded by 5.6%, with construction recording a strong 10.3% growth and manufacturing rebounding by 3.6%. However, the agriculture sector contracted by 1.6% due to the impact of six successive typhoons, which disrupted crop production, livestock, and fisheries.
Despite challenges, domestic demand remained strong, expanding by 5.7% in 2024 as all major expenditure components showed positive growth. Household consumption increased by 4.8%, supported by lower inflation and interest rates. Government spending also rose by 7.2%, driven by higher personnel expenditures, infrastructure investments, and social protection programs, including financial aid for rice farmers. Additionally, gross capital formation expanded by 7.5%, reflecting higher public and private construction activities. Exports and imports also posted gains of 3.4% and 4.3%, respectively, despite global trade protectionist measures.
Looking Ahead to 2025
Heading into 2025, the Philippine government remains optimistic about sustaining economic momentum. Secretary Recto highlighted that lower inflation and expected interest rate cuts will boost consumption and investment. He also noted that the full implementation of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act will enhance the country’s attractiveness to investors. Recent engagements at the World Economic Forum and Philippine Business Dialogue in the Netherlands have already sparked strong business interest, which is expected to materialize into more investments in 2025.
To further support economic growth, the government has allocated PHP 6.326 trillion for the 2025 national budget, prioritizing infrastructure, social programs, and economic resilience. Additionally, the Rice Competitiveness Enhancement Fund (RCEF) has been extended until 2031, with an increased allocation of PHP 30 billion to stabilize rice prices and support local farmers. Efforts to control African Swine Fever (ASF) and administer vaccines will also be intensified to ensure a stable pork supply.
The government is also advancing initiatives to strengthen the labor market. The Trabaho Para sa Bayan (TPB) Plan, a 10-year employment roadmap, is expected to generate at least three million jobs by 2028 by attracting investments and enhancing workforce employability. Meanwhile, the introduction of a value-added tax (VAT) refund for non-resident tourists aims to boost tourism and foreign spending on local goods and services.
Despite potential risks in 2025, including weather disturbances, global economic slowdowns, and geopolitical tensions, the Philippine government is committed to implementing growth-enhancing strategies. With pro-business policies, infrastructure investments, and strong domestic demand, the country remains on track to sustain its economic momentum and solidify its position as one of Asia’s fastest-growing economies.
Implications for French Businesses in the Philippines
The continued expansion of the Philippine economy presents opportunities for French businesses looking to expand or strengthen their presence in the country. The PH government’s pro-investment stance, particularly through CREATE MORE, enhances the business climate for foreign investors, including French firms in industries such as retail, manufacturing, finance, and infrastructure. With lower inflation and interest rates, consumer spending is expected to rise, potentially benefiting French brands in the luxury, fashion, and food sectors.
Additionally, public and private construction growth could create demand for French expertise in construction like infrastructure development, sustainable urban planning, and engineering solutions. The expansion of the tourism industry, supported by the VAT refund for non-resident tourists, may also encourage more French investments in hospitality, travel, and leisure services.
As the Philippine economy progresses toward greater openness and resilience, the French Chamber of Commerce and Industry in the Philippines aims to seize these economic opportunities by strengthening bilateral relations and remaining committed to supporting our members as they navigate this dynamic market poised for sustained growth.
Reference:
Department of Finance Philippines. (2025, January 30). PH Economy Maintained Steady Growth in 2024 despite challenges; Outlook for 2025 Remains Bullish Driven by Lower inflation, Higher consumption, and Investments | Department of Finance. https://www.dof.gov.ph/ph-economy-maintained-steady-growth-in-2024-despite-challenges-outlook-for-2025-remains-bullish-driven-by-lower-inflation-higher-consumption-and-investments/