The Philippines finished strong in 2023 with a full-year gross domestic product (GDP) growth rate of 5.6 percent, outpacing major economies in Asia, such as China (5.2 percent), Vietnam (5.0 percent), and Malaysia (3.8 percent) based on the latest available data.

GDP refers to the total value of all goods and services produced within a country over a given period. It is a key indicator used by economists and policymakers to assess the size and health of a country’s economy and compare the economic performance of different countries.

The Philippines’ GDP outturn in 2023 did not just outperform its neighbors but also exceeded or matched the forecasts of multilateral organizations and private analysts, such as the International Monetary Fund (IMF), the ASEAN+3 Macroeconomic Research Office (AMRO), and the World Bank (WB).

In the fourth quarter of 2023, the Philippine economy grew by 5.6 percent due to stronger domestic demand despite an elevated inflation rate and external challenges.

The strength in domestic demand was evident in higher household consumption and investments, particularly public infrastructure showing that the Build Better More Program is reaping benefits in terms of its high multiplier effect on the economy.

The robust household consumption reflects strong spending, supported by a healthy job market, consistent inflows of remittances from overseas Filipinos, and a surge in demand for goods and services.

Faster private consumption in Q4 2023 was driven by restaurants, hotels, and transport, indicating that people are going out more and have more money to enjoy non-essential activities.

“The strong economic performance in 2023 is a clear testament to the government’s efforts in creating an environment conducive to enhancing the purchasing power of Filipinos. We are firm in our commitment to ensure that our economic progress is felt in the day-to-day lives of our people,” Finance Secretary Ralph G. Recto said.

Meanwhile, the full-year GDP resulted in a preliminary debt-to-GDP ratio of 60.2 percent in 2023, an improvement from the 60.9 percent recorded in 2022 and better than the 61.2 percent Medium-Term Fiscal Framework (MTFF) target.

The debt-to-GDP ratio is a measure that helps understand a country’s economic health by comparing its total government debt to its economic output. It helps assess a country’s ability to manage its debt based on the size of its economy.

“Our debt right now remains at a very manageable level, and we are on track to bringing down the debt-to-GDP ratio to less than 60 percent by 2025. We have a sound and prudent strategy in place to effectively manage our debt and financing requirements,” Secretary Recto said.

2024 Economic Outlook

The government projects faster GDP growth of 6.5 to 7.5 percent in 2024 despite domestic and external headwinds.

The government will continue pushing forward strategies to boost economic growth and ensure that the Philippines remains on track with its medium- to long-term goals.

According to Secretary Recto, the first order of business is to Reduce Emerging Inflation Now (REIN) to boost private spending.

The Inter-Agency Committee on Inflation and Market Outlook (IAC-IMO), co-chaired by the Secretaries of the Department of Finance (DOF) and the National Economic and Development Authority (NEDA), is set to meet on February 16, 2024 to align efforts on the timely implementation of direct measures to curb food and non-food inflation.

“Ensuring that prices of goods remain stable and affordable is crucial to further grow the economy, consequently enabling us to boost revenue collection,” Secretary Recto said.

The Finance Chief said he targets to achieve the PHP 4.3 trillion revenue collection goal in 2024 by enhancing tax administration efficiency and pushing for the passage of the DOF’s refined priority tax measures that promote fiscal sustainability without hindering economic growth and aggravating inflation.

“Increasing revenues will mean reducing the deficit and our dependence on debt. We will grow the economy by boosting investments. This will broaden the tax base and improve tax collections,” he said.

Secretary Recto said he would act swiftly on investments through the timely and efficient implementation of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act; amendments to the Public Service Act (PSA), Retail Trade Liberalization Act (RTLA), and Foreign Investments Act (FIA); and the revised implementing rules and regulations (IRR) of the Renewable Energy Act.

He added that the Philippines will take advantage of the vote of confidence of multilateral organizations and credit rating agencies, the strong macroeconomic fundamentals, and sound fiscal policies to attract more investments and further improve the employment conditions in the country.

“The decelerating inflation, robust and young labor market, implementation of creative reforms to boost revenue collections, improvements in the ease of doing business, sound external conditions, and strong financial sector should prepare the red carpet for the influx of new investments and business that will provide high-quality jobs and increase household income to protect the purchasing power of every Filipino,” he said.

On top of these, the government will efficiently execute its 2024 budget by ensuring the timely implementation of projects to avoid government underspending, allowing it to hold fast to the commitment to delivering high-yielding infrastructure projects.

This will be accompanied by partnering with local government units and improved governance, specifically on regulatory quality, voice and accountability, and control of corruption.