Last Thursday the Philippine Statistics Authority (PSA) released the country’s fourth quarter (Q4) GDP performance. It was 5.2%. This means that the full year (Q1-Q4) 2024 growth was 5.6%. Here I will compare this with other major countries, specifically the 60 largest economies in the world when measured by GDP size at purchasing power parity (PPP) values of at least $350 billion in 2023.
The result shows that the Philippines had the second-fastest growth among the 60, next to Vietnam. But India looks to be second because its Q1-Q3 growth was already at 6.6%, so the Philippines will likely be the third fastest among the 60 largest economies in the world (see Table 1).
I checked the press statements released by the economic managers regarding this. Finance Secretary Ralph G. Recto said that: “While this is below our target, we continue to be one of the fastest-growing economies in both the region and the world… We remain optimistic about our outlook for 2025. A lower inflation rate gives us more room to ease interest rates… CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy Bill) 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.”
Budget Secretary Amenah F. Pangandaman expressed similar optimism, saying that: “While our target for 2024 is 6% to 6.5%, the results still put the Philippines among the fastest-growing economies in the Asia-Pacific region, outpacing many of our ASEAN neighbors… despite record-breaking six consecutive storms between end-October and middle of November which greatly affected the economy. We still hit 5.6% in spite of all these storms shows that our formula for growth is working.”
I agree with the assessment of the two officials. The weather was bad in Q4 last year but may be favorable to us in Q1 this year. It has been generally wet and cloudy. I think agriculture will post high growth this quarter as many rice fields were still planted with their third crop while before they should be on fallow or rest period.
I checked some details of our full year 2024 GDP performance via expenditure or demand side, and industry source or supply side.
On the expenditure side, fast growth of 7.5% was registered in investments or capital formation and it makes up 24% of GDP. Government consumption also grew by 7.2%, but it is only 14% of GDP.
On the industrial origin side, fast growth of 6.7% was registered by the services sector, which constitutes 63% of GDP. Agriculture which constitutes 8% of GDP, contracted at -1.6%, largely due to the series of storms that affected many crops (see Table 2).
US President Donald Trump’s energy policy of “drill baby drill” should lead to higher production and exports of oil, LNG, and coal. Thus, we can expect lower energy prices contributing to lower inflation in the next four years. We should take advantage of this great opportunity, with our agriculture using more machines to raise productivity while reducing crop waste and losses. Our power generation sector, which relies more on gas/LNG and coal, will experience lower fuel costs and this can lead to cheaper electricity prices.
Low energy prices and low inflation improve consumer confidence. Household consumption, which constitutes 73% of GDP, should pull up overall economic output, and create more jobs for our people. We should complement this with cuts in bureaucracies and regulations, cuts in public spending to reduce the budget deficit, reducing borrowings, and reducing interest payments.
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.