With the new year fast approaching, it is time that we reflect on the lessons, realizations, and hurdles we have faced. 2024 has been a year marked by resilience, sustainable growth, and transitions brought by changes and disruption.
Recently, our Firm, P&A Grant Thornton hosted its annual Economic Overview and Industry Updates seminar for the fiscal year with the aim of upskilling and equipping professionals through a discussion on the current economic state of the country. During this forum, a common call to action emerged from the industry leaders and government officials in attendance: prioritize sustainable, long-term growth across all sectors of the economy.
Heading into 2025, this begs the question: how can we keep the momentum going? Let’s look back at the state of the Philippine economy this year, as well as the emerging trends and findings, in order to chart our course moving forward.
Keeping the Momentum
Neil Adrian S. Cabiles, Assistant Secretary of the Department of Finance, gave an overview of the state of the Philippine economy and industry updates in his presentation during our seminar. Notably, he called on the participants to redefine our economic horizon by identifying the building blocks of the Philippine economy.
A survey conducted this October by the Philippine Statistics Authority (PSA) alongside the Bangko Sentral ng Pilipinas (BSP), International Monetary Fund (IMF), and World Economic Outlook (WEO) found that the Philippines’ gross domestic product, or GDP, grew an average of 6% during the current administration, one of the fastest in the ASEAN region. With the country being forecasted to sustain this growth moving onto 2025 and beyond, it falls not only on the public sector but the private sector as well to keep the momentum going.
Along with these positive trends, the ultimate goal remains to reduce poverty across our country. Neil noted that alongside maintaining this economic growth, the aim is to reduce poverty incidence to a single digit by 2028.
Among the factors that continue to drive this upward trend include easing inflation and steady improvements to labor market conditions, the implementation of investment-inducing reforms such as the CREATE MORE Act, and greater participation from the private sector. Meanwhile, natural disasters caused by climate change, election-related risks, geopolitical tensions, and a global economic slowdown risk the trajectory of our economy.
Addressing these risks while capitalizing on the drivers of our economy is imperative to sustained economic growth. However, this is easier said than done: navigating this ever-changing global landscape through careful planning and strategic decision-making and strong collaboration between both the private and public sectors will be crucial.
Industries on the Rise
While the wholesale and retail trade sectors remain the sectors with the highest contribution to the growth of our economy, Q3 2024 saw a marked increase across the top 10 sectors, with a 6.3% year-on-year growth rate across the board, according to the survey by the Philippine Statistics Authority. Notably, the human health and social work activities sector saw a remarkable 11.9% increase, reflecting the growing prioritization of healthcare and social services in the country.
The real estate sector also saw growth, with Joey Bondoc, Research Director at Colliers International, noting the increase in demand for office spaces in his review of the sector for Q3 and Q4 2024, with government and IT-BPM firms driving demand. As flexible work setups have become the norm, an observed trend is Central Business Districts (CBDs) with vacancies below industry average, marking a significant shift in the real estate landscape. Aside from this, other trends for the real estate sector include the rise in demand for leisure spaces, as well as retail trends driving a need for retail spaces in CBDs and malls.
This shift highlights the interconnectedness of these industries, with a retail trend such as the “collectibles” and “pop-up store” craze having a ripple effect across sectors of the economy. Through viewing these trends through a holistic lens, we can identify opportunities for growth and innovation in the Philippine economy.
Financial Technology Continues to Evolve
2024 saw the continued rise of digital banks, cryptocurrency, and financing companies, amidst issues of security and regulation being raised. Atty. Paolo Montano M. Ong, Assistant Director of the PHILFINTECH Innovation Office of the Securities and Exchange Commission (SEC), highlighted the SEC’s role in this evolution, emphasizing security and supervision in protecting investors as the FinTech industry develops.
Another trend was the shift towards a “cash-lite” economy, with the BSP pushing for banks and other financial firms to waive fees on electronic fund transfers for personal transactions and payments to MSMEs. This, along with efforts to prioritize cybersecurity, marks the continued digital transformation of the Philippine finance industry.
Going Green Amidst the Push for Innovation
A key trend emerging this year is the notable shift to sustainable solutions and processes across all sectors. With businesses identifying the need for reduced carbon emissions and increased resource efficiency, they are investing in renewable energy sources, energy-efficient technologies, and sustainable materials. On a macro level, the government has implemented policies and incentives to promote sustainable development and green industries. Sustained growth requires that we push for a circular economy where resources are used efficiently, waste is minimized, and products are designed for reuse and recycling.
With the emergence of industry-changing technologies such as artificial intelligence and machine learning concurrent to this push for sustainability, businesses must learn to balance innovation with environmental responsibility.
Dennis Ng, Founder and Chief Executive Officer of Mober Philippines, a logistics company, is a prime example of the shift of the market towards sustainable and eco-friendly practices while maintaining innovation. A pioneer in green+tech logistics in the Philippines, the company is a proponent of the integration of electric vehicles in the logistics sector. While roadblocks remain in the financing of this, it is apparent that sustainability and innovation can go hand in hand moving forward.
The Road Ahead
The positive results we see right now are the culmination of years of hard work, strategic planning, and sound economic policies. To keep the momentum going, we must continue to see the big picture.
As we continue charting a course towards continued growth and resilience, it is imperative that we remain adaptable, innovative, and committed to sustainable development. Moving into the new year, there remains much to be done to ensure a prosperous future for the country. Let’s keep the lessons we learned this year as we build upon our successes and address our shortcomings towards an even more resilient, adaptable, and equitable economy. With continued collaboration between the public and private sectors, as well as between individuals, we can chart a sustainable, resilient course for our economy.
As published in The Manila Times, dated 11 December 2024
