“Standard and Poor’s Global Intelligence believes the Philippines is on track to become a US$1 trillion economy by 2033”
With three days to go before President Marcos Jr. goes up the rostrum of the session hall of the House of Representatives to deliver his third State of the Nation Address (SONA), we’re certain he will underscore the economy’s continuing growth in the years ahead.
The Philippine economy posted gross domestic product growth of 5.7 percent in the first quarter of this year. The question now is whether this upward trajectory be sustained for the rest of the year.
The first-quarter economic growth was posted by various sectors: financial and insurance activities grew by 10 percent; wholesale and retail trade, 6.4 percent; manufacturing, 4.5 percent; industry, 2.6 percent; and services, 1.0 percent.
With the Philippine economy more resilient than expected in 2023, current projections indicate that it could again achieve healthy growth this year of between 5 and 6 percent.
Inflation rates are expected to range between 3.2 and 3.6 percent this year after ending 2023 at 6.0 percent, above the 2.0 to 4.0 percent target range set by the government.
On the whole, the 2024 outlook for the country’s six key economic sectors is bright, according to Standard and Poor’s Global Intelligence.
Financial services: The recovery of the financial services sector appears on track as year-on-year growth rates stabilize.
In 2024, this sector will likely continue to grow, though at a slower pace of about 5 percent.
Financial inclusion and digitalization are contributing to growth in this sector in 2024.
Energy and power: The outlook for the energy sector looks positive, with the potential to grow by 7 percent in 2024 as the country focuses on renewable energy generation.
Currently, stakeholders are focused on increasing energy security, particularly on importing liquefied natural gas to meet power plant requirements as production in one of the country’s main sources of natural gas, the Malampaya gas field, declines.
Healthcare: Growth in the healthcare industry may slow to 2.8 percent in 2024, while pharmaceuticals manufacturing is expected to rebound with 5.2 percent growth this year.
Healthcare demand could grow, although the quality of care may be strained as the health worker shortage is projected to increase over the next five years.
Consumer and retail: Growth in the retail and wholesale trade and consumer goods sectors is projected to remain stable in 2024, at 4 percent and 5 percent, respectively.
Inflation, however, continues to put consumers under pressure. While inflation rates may fall—predicted to reach 4 percent in 2024—commodity prices may still remain elevated in the near-term.
The latest survey shows that inflation or high pieces is a top concern for Filipinos that they want government to address.
Manufacturing: Manufacturing is a key contributor to the Philippine economy, accounting for approximately 19 percent of GDP in 2022, employing about 7 percent of the country’s labor force, and growing in line with GDP at approximately 6 percent between 2023 and 2024.
Information technology/business process outsourcing: The information technology business process outsourcing (IT-BPO) sector is on track to reach its long-term targets, with $38 billion in forecast revenues in 2024.
Emerging innovations in service delivery and work models could drive further growth in the sector.
But how sustainable is this growth?
The Philippines is considered the fourth most vulnerable country to climate change in the world due to its geographic location. It has a higher risk of exposure to natural disasters, such as rising sea levels.
Approximately $3.2 billion, on average, in economic loss could occur annually because of natural disasters over the next five decades, translating to up to 7 to 8 percent of the country’s nominal GDP.
Having grown faster than other economies in Southeast Asia in 2023 to end the year with 5.6 percent growth, the Philippines can expect a similarly healthy growth outlook for 2024.
But here’s where it gets really interesting. Standard and Poor’s Global Intelligence believes the Philippines is on track to become a US$1 trillion economy by 2033.
Why? The Philippines economy grew at a pace of 7.6 percent in 2022, the fastest rate of economic growth recorded by the country since 1976.
With strong growth forecast over the medium-term outlook, the size of Philippines GDP measured in US dollar nominal terms is set to reach $1 trillion by 2033.
This will make the Philippines one of the largest emerging markets in the Asia-Pacific as well as a leading emerging market globally. (Email: [email protected])
