Private Spending Drives Philippines' Growth by 5.2%

Finance Secretary Ralph G. Recto highlighted that the Philippines achieved a 5.2% growth rate in the third quarter of 2024, driven by an acceleration in private spending, maintaining its position as one of the fastest-growing economies in Asia.

The Philippines' gross domestic product (GDP) growth in Q3 exceeded that of Indonesia (5.0%), China (4.6%), and Singapore (4.1%).

The Philippines' gross domestic product (GDP) growth in Q3 exceeded that of Indonesia (5.0%), China (4.6%), and Singapore (4.1%). For the first three quarters of 2024, the country’s growth rate was also higher than Indonesia's (5.0%), China’s (4.9%), and Singapore's (3.3%).

“Household spending is particularly a bright spot, growing by 5.1%, faster than in the last two quarters due to slower inflation. The recent policy rate cuts and reserve requirement reductions could increase liquidity in the economy and boost purchasing power,” Recto said.

“As interest rates decrease, private construction will likely rebound due to lower housing loan costs, among other factors. We also expect increased spending, especially on non-essential items, as we approach the holiday season given stable prices and a strong labor market,” he added.

On the supply side, the industry and services sectors grew by 5.0% and 6.3%, respectively, although at a slower pace than last year due to base effects.

All industry and services sub-sectors posted positive growth, with construction, accommodation, and food services, and health and social work activities showing the fastest increases.

However, the agriculture sector contracted by 2.8% in the quarter due to the combined lagged effects of El Niño, La Niña, and several typhoons.

“The government has been responsive in providing much-needed support for our farmers, fishermen, and other agriculture workers to boost productivity,” Recto noted.

On the demand side, domestic demand remained robust with a 6.6% growth rate, while household spending accelerated to 5.1% from 4.7% in the previous two quarters. Total investments grew by 13.1%, sustained by strong construction activities, especially private construction, which rose by 11.9% compared to 10.3% in the previous quarter.

Government’s Strategy to Drive Rapid, Inclusive Economic Growth

The economic team is advocating for the swift Congressional passage of the proposed PHP6.35 trillion national budget for 2025, the government’s largest tool to stimulate faster economic growth.

This budget represents 22.1% of the country’s 2025 projected GDP and is 10.1% higher than the 2024 budget of PHP5.77 trillion.

More than half of the 2025 budget, or 62.5%, will be allocated to social and economic services such as infrastructure, health, education, human capital development, social welfare, employment, housing, and other social protection programs.

These investments aim to create more quality jobs, increase incomes, and reduce poverty.

The government plans to focus on preparing the economy and workforce for an AI-driven future to sustain growth in the services and industry sectors.

Additionally, it aims to strengthen climate resilience and disaster preparedness through enhanced budgetary allocations and support to local governments via the People’s Survival Fund (PSF) and increased micro-insurance coverage for vulnerable communities.

To boost the agriculture sector and ensure food security, the Department of Agriculture (DA) will accelerate its African swine fever vaccination program and other interventions.

The extension of the Rice Competitiveness Enhancement Fund (RCEF) to 2031, with an increase from PHP10 billion to PHP30 billion, is expected to enhance local rice production and support farmers.

The Department of Finance (DOF) is intensifying efforts to monitor and mitigate price increases on food and non-food items to keep inflation within the target range.

The government is also committed to maintaining high public spending on infrastructure, targeted at 5% to 6% of GDP annually, as this has a high multiplier effect on the economy.

The new Public-Private Partnership (PPP) Code is expected to encourage private investments in public infrastructure, especially in power generation and transmission. Additionally, the passage of the CREATE MORE bill this year is anticipated to increase private investment and boost economic growth.