Economic Growth in 2023 & Economic Outlook 2024

In Terms of Economic growth, 2023 was a successful year for the Philippines. While the forecast was between 5 and 6.3 percent, the gross domestic product (GDP) grew by 5.6 percent last year according to the World Bank, with a projected 5.8 percent expansion in the fourth quarter alone. The Philippines ended the year 2023 with an inflation rate of 3.9 percent in December - compared to 8.7 percent in the beginning of the year the inflation rate has fallen considerably. The inflation rate is expected to remain within the target range of 2 percent to 4 percent in 2024, according to a survey conducted by the Bangko Sentral ng Pilipinas (BSP).

The Philippine economy is expected to continue its growth momentum in 2024. The World Bank adjusted their forecast for 2024 to 5.8 percent. The January Quarterly Update of the AMRO’s ASEAN+3 Regional Economic Outlook showed a growth forecast of 4.5 percent for the ASEAN+3 region, but predicts an expected growth in the Philippines of 6.3 percent this year surpassing the estimated growth of 5.6 percent last year. The Philippines are projected to be the fastest-growing economy in Southeast Asia this year, according to AMRO.

The government has a 6 to 7 percent economic growth target for 2024. The International Monetary Fund (IMF) also predicts that the Philippine economy will grow by 6.0 percent in 2024, supported by acceleration in public investment and improved external demand for the Philippines’ exports. The Philippines leave behind 2023 with the goal of becoming an upper middle-income economy in the New Year. If the COVID-19 epidemic hadn't struck, the country could have achieved this target in 2022 already. However, President Marcos' aspirations for a "Bagong Pilipinas" (a “New” Philippines) during the second full year of his term will be affected by El Niño and climate change, the wars abroad, the West Philippine Sea confrontation with China, and even the discussions about changing the Constitution in Congress.

The Philippine economy, which grew the fastest among the Asian economies in 2023, is expected to outpace that rate in 2024, officials said, though there are concerns about global dangers that could cloud the picture. As per the DBCC, growth in 2024 will be driven by private consumption, as inflation returned to the target range, falling oil prices, robust public spending, increased investments lured by the nation's sound macroeconomic fundamentals, investment-grade credit ratings, and the implementation of structural reforms and increased demand for Philippine exports as supply chain bottlenecks ease. In comparison with countries in the ASEAN Region, the Philippines generally exhibited better results in the business situation (44 %), business expectations (63 %), and employment intentions (48 %).

Employment

Besides the growth of the gross domestic product, the year 2023 also ended with a 10 percent jump in annual hiring activity. The talent platform foundit tracked an employment index of the Philippines of 128 in December, up from 116 in the same period in 2022. The Philippine Statistics Authority’s Labor Force Survey showed that the unemployment rate fell to 3.6 percent in November from 4.2 percent in the previous month and in November 2022. For the first 11 months of 2023, the unemployment rate stood at 4.5 percent, well below the 5.3 percent - 6.4 percent target under the Philippine Development Plan. The employment rate rose to 96.4 percent in November 2023. The retail sector recorded the largest increase in hiring activity demand with 60 percent, followed by education (49 %), business process outsourcing and IT-enabled services (11 %), and healthcare (11 %). Growth trends were also seen in engineering, construction, and real estate (9 %), logistics (7 %), advertising, media, public relations and entertainment (6 %) as well as hospitality (4 %). According to AHK, the Philippines stands out globally with its impressive employment intentions (63 %). This positions the country as the top-ranked nation where participants are most likely to increase hiring in the coming 12 months.

Increased visibility on the international stages

The year 2024 started with a high-level visit in Manila: After the visit of Ursula von der Leyen (European Commission President) in the Philippines on 31 July 2023, the German Federal Foreign Minister, Annalena Baerbock, visited Manila on 11 January 2024 - the first visit by a German Federal Foreign Minister in over a decade. She met President Ferdinand Marcos Jr., who announced his intention on visiting Germany on 12 March 2023. Her visit underlines the growing importance of the Philippines as an investment destination and strategic partner for Germany in the ASEAN region which the minister referred to as the "epicenter of global growth". As part of her visit programme, Members of the Board to the German-Philippine Chamber of Commerce and Industry, Inc. (GPCCI / AHK Philippines), and Dr. iur. Marian Majer, who assisted by one of the memorandums signed on this occasion, welcomed the minister and her delegation.

Foreign Direct Investment

The Philippines aim to have the second highest foreign direct investment in Southeast Asia by 2028 as it surpassed the net FDI inflows of Malaysia and Thailand from January to September 2023. For 2024, the final figures are have not yet been released. The country plans to approve investments between PHP1.3 trillion and PHP1.5 trillion. Total Foreign Investments (FI) approved in the third quarter of 2023 was recorded at PhP 27.30 billion, an increase of 109.3 percent from the PhP 13.05 billion total FI in the same quarter of 2022. In comparison with other regions in the Worldwide statistics, the Philippines ranks highest in services (47 %) as a factor of investment with a similar trend to other regions in sales and marketing (50 %).