Recto: PH remains a frontrunner in ASEAN growing the fastest by 5.7% in Q1 2024 with industry as the brightest spot driven by strong domestic manufacturing

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Finance Secretary Ralph G. Recto has underscored that the Philippine economy is once again a frontrunner in the ASEAN region posting the highest growth of 5.7% in the first quarter of 2024 despite the onslaught of El Niño, with the industry sector being the brightest spot driven by strong domestic manufacturing.

The Philippines grew the fastest alongside Vietnam (5.7%) followed by Indonesia (5.1%), Malaysia (3.9%), and Singapore (2.7%).

“More than our performance in the region, what is to be celebrated here is the encouraging growth seen in the manufacturing sector as it is the most crucial sector for long-term employment, productivity, value-added generation, and innovation. This sets the course for the Philippines to become a premier manufacturing hub in Asia,” Finance Secretary Ralph G. Recto said.

“The significant growth in our manufacturing sector is a major win for the country’s labor market. Historically, nations that have achieved successful structural transformation have built competitive manufacturing industries. These industries can effectively harness our young, dynamic, and diverse workforce, which paves the way for a capital-intensive industry sector. Additionally, this is supported by our resilient and growing services sector,” he added.

“So, if we are to sustain our high growth trajectory, we have to focus on expanding both manufacturing and services,” he stressed.

The country’s economic expansion in the first quarter of the year was broad-based as all major production sectors registered positive growth, with the industry sector accelerating by 5.1%. 

Manufacturing, the main component of the industry sector, expanded by 4.5% on the back of increased production of food, electronics, and chemical products. 

The services sector likewise posted an expansion of 6.9% driven by the double-digit growth of the accommodation and food services at 13.9%, which indicates a sustained recovery of tourism-related activities.

The Department of Tourism (DOT) has recently reported that for the first three months of 2024, the country’s tourism receipts amounted to PHP 157.6 billion, a remarkable recovery rate of about 20.7% from the same period in 2019 before the COVID-19 lockdowns.

Meanwhile, the agriculture sector also posted a 0.4% growth despite the onslaught of El Niño mainly driven by higher poultry and egg production.

Despite the weaker global growth and geopolitical challenges, the strength in domestic demand continued to propel the country’s economic growth. 

Household consumption remained robust as Filipinos spent more on recreation & culture and restaurants & hotels. This is supported by a healthy job market with historically low unemployment and underemployment rates and consistent inflows of remittances from overseas Filipinos.

Government spending on public infrastructure projects recorded a double-digit growth of 12.4% as the Build Better More program continues to gain traction, especially with the accelerated implementation of the Public-Private Partnership (PPP) Code.  

Meanwhile, net exports also expanded by 9.5% due to the improvement in the exports of goods and services, growing by 7.5%.


Government’s game plan to spur rapid and inclusive economic growth

As domestic and external headwinds persist in 2024, the government will continue pushing forward growth-enhancing strategies to boost economic expansion and ensure that the Philippines remains on track with its medium- to long-term goals.

To finance the PHP 5.767 trillion national budget for 2024, Secretary Recto said the DOF is ramping up resource mobilization efforts to collect the PHP 4.3 trillion target revenues this year.

“The government is on track to meet this goal, with total revenues already reaching roughly PHP 1.41 trillion as of the end of April,” Secretary Recto said.

The Finance Chief also placed greater emphasis on improving non-tax revenue collections to generate more funds without imposing additional taxes on the people, mainly through dividend remittances from government-owned or -controlled corporations (GOCCs).

The GOCCs have thus far contributed PHP 88.6 billion in cash dividends as of May 6, 2024, 11 times higher than its remittance of PHP 8 billion during the same period last year.

The government is also on track to meet its financing requirements for the year, raising its largest domestic issuance of PHP 584.9 billion from the 30th tranche of Retail Treasury Bonds (RTB 30) issuance in February and the USD 2 billion dual-tranche global issuance in May. 

The government has secured funding from the market at very cheap rates, with the 10-year spread of the global bond issuance being the tightest among all our similar issuances since 2022, while the 25-year sustainability tranche achieved the second-best rate in the government’s history.

Furthermore, the government will continue to intensify the implementation of interventions to address inflation to boost private spending and revenue collections.

“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.

While accelerating its efforts in countering the impact of El Niño on food security, the government is also proactively preparing to face the imminent threat of La Niña.

Meanwhile, the Finance Chief also emphasized growing the economy by boosting investments, which will in turn create more job opportunities, broaden the tax base, and improve tax collections.

To encourage more domestic and international investors, Secretary Recto is pushing for the immediate passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE). 

The bill will enhance the ease of doing business by improving the country’s tax incentives policy and administration, and tailor-fit the interests of investors in strategic investments.

The CREATE MORE bill was already approved by the House of Representatives on the third and final reading on March 18, 2024.

Moreover, Secretary Recto, along with the Economic Development Group (EDG), has instructed agencies to finalize and submit their revised rules and regulations to ensure the proper implementation of the Public Service Act, which will boost foreign investments in the country.

To sustain infrastructure spending, the President has issued Executive Order (EO) No. 59  on April 30, 2024 to accelerate the rollout of the projects in the country by streamlining the permitting process.