2024 NEDA YEAR-END REPORT
Arsenio M. Balisacan, PhD
Secretary
National Economic and Development Authority
NEDA Press Chat | November 29, 2024 | 10:00 AM
Members of the press,
Fellow public servants,
Good morning!
In Pursuit of Sustainable and Inclusive Economic Growth in 2024
First, let us look at the state of our economy. The Philippine economy has shown remarkable resilience this year. Our GDP growth averaged 5.8 percent for the first three quarters of 2024. We experienced significant weather-related disturbances or disruptions throughout the year: a prolonged dry season due to El Niño and the consecutive strong typhoons amid La Niña. Increasingly volatile climate patterns have affected our growth and adversely impacted agriculture, the movement of goods, and overall economic activity in affected areas.
Notwithstanding these disruptions, our growth rate still positions us as one of the fastest-growing economies in Asia. It is a testament to our people’s hard work and dedication and the sound policies implemented by our Government despite such challenging conditions.
We remain optimistic about the fourth-quarter economic performance. Holiday spending, more stable commodity prices, and a robust remittance inflow and labor market give us confidence that our 6.0 to 7.0 percent growth target is still achievable.
The Government has effectively managed inflation, averaging 3.3 percent from January to October 2024, comfortably within the Government’s target range of 2.0 to 4.0 percent for the year. Through the Government’s vigilant measures to stabilize prices amid external pressures, we were able to keep inflation within our target band.
Our critical interventions included a comprehensive tariff review of agricultural commodities to maintain stable prices. This initiative has helped ease inflation. However, we recognize the need for continuous monitoring and addressing this issue, as rice remains the main driver of inflation and prices remain elevated.
The robust labor market is a vital pillar supporting our growth. Based on the September labor force survey, the total labor force participation rate increased to 65.7 percent from 64.0 percent in the same period last year.
Significantly, the unemployment rate decreased to 3.7 percent from 4.5 percent in September 2023.
However, the underemployment rate increased to 11.9 percent in September 2024 from 10.7 percent in September 2023. Still, the trend has been broadly downward, as we have seen over the last few years. We focus on improving our employment prospects through aggressive investment-promotion efforts and the accelerated rollout of supporting infrastructure.
As we upskill and train our workers, we are finalizing the Trabaho Para sa Bayan (TPB) Plan by the end of December. With its completion, I am confident that the Plan will prove extremely useful in further supporting our goal of creating more high-quality and stable jobs that will provide higher wages to Filipino workers.
Over the past year, the Government has demonstrated its commitment to attaining the targets outlined in its fiscal consolidation plan through the passage of critical fiscal measures alongside improvements in revenue administration. For 2024, the Government targets to reduce the deficit to 5.6 percent of GDP. For January to September 2024, the deficit settled at 5.1 percent of GDP, narrower than the 5.7 percent recorded in the same period last year.
The S&P Global Ratings recently upgraded its outlook on the Philippines to positive from stable. This development reflects the economy’s above- average growth potential and the significant improvements in the country’s institutional and policy settings, driven by ongoing fiscal reforms, infrastructure development, and enhanced investment conditions.
Looking Ahead: Steadily Paving the Path to Progress
We have a good chance of attaining upper middle-income country (UMIC) status in 2025. Attaining this status will require that we achieve our growth target this year, that we maintain our growth trajectory in 2025, and our currency will not weaken significantly relative to the currencies of our major trading partners.
With inflation expected to stay comfortably within the target range, the Bangko Sentral ng Pilipinas’ has carefully and deliberately eased its monetary policy settings, and we are pleased to observe improvements in consumer and business sentiment as a result. We expect the BSP’s decision to cut policy rates by a cumulative 50 basis points and reduce reserve requirements to boost liquidity to spur growth in private spending, particularly on big-ticket consumer items and investments in capital-intensive infrastructure in the coming quarters, which we see as another significant economic growth driver. This move will support economic growth by making borrowing more affordable for businesses and consumers.
Our goal of reducing nationwide poverty to a single-digit rate by 2028 remains achievable. Despite high inflation, we have already made remarkable strides, with poverty falling to 15.5 percent in 2023 from 18.1 percent in 2021. Maintaining low and stable prices is critical to reducing poverty and making economic growth more inclusive. We will continue to enhance our social protection programs, particularly through digital solutions enabled by the National ID, to protect our gains and ensure that no one is left behind.
With instructions from the President, we carried out the first nationwide Community-Based Monitoring System, or CBMS this year. The Census of Population, slated to be conducted in 2025, was moved earlier and integrated into the CBMS operations to save on government resources. By next year, we will know the country’s post-pandemic population. With the available CBMS data, we are assured of quality and updated information for beneficiary targeting for projects like the 4Ps. The availability of granular data up to the barangay level will pave the way for data-driven governance of local governments to support the delivery of services to vulnerable sectors.
In April 2024, NEDA presented to the President a devolution study that analyzed the fiscal implication of reassigning certain functions, services, and facilities or FSFs to be shared among Local Government Units, as proposed by the Department of the Interior and Local Government and the Union of Local Authorities of the Philippines. It also provided recommendations on the phasing of implementation. The study informed the proposed amendments to Executive Order 138, s. 2021, which the Department of Budget and Management subsequently submitted to the Office of the President. Ultimately, we see this initiative as enhancing the efficiency and effectiveness of local public service delivery to every Filipino.
Our experiences this year, particularly the previous months, highlight the need to adapt to and mitigate the risks of climate change. Therefore, aligned with the directives of the President, we are strengthening our mechanisms for disaster response and rehabilitation efforts while enhancing our resilience against future calamities. We prioritize rebuilding damaged public infrastructure and enacting measures to spur private sector investments in climate-ready infrastructure and climate-smart technologies.
Many of the external risks we consider stem from geopolitical tensions, big- power rivalry, and uncertainty arising from the political-economy dynamics within and between the country’s major trading partners such as the United States. With the upcoming assumption of United States President-Elect Trump, we maintain that the Philippines is ready to work with any economy and to adjust our policies accordingly, as we have continuously built solid and close relationships with the U.S. and other countries.
Frameworks and Projects for Socioeconomic Transformation: NEDA Board Accomplishments
The year 2024 marked significant milestones that have brought us closer to the goals outlined in the Philippine Development Plan (PDP) for 2023-2028. Under President Ferdinand R. Marcos Jr.’s leadership, the NEDA Board passed or approved critical policy frameworks and projects that will prove crucial to achieving the development priorities identified in the PDP.
In 2024, the NEDA Board and the ICC approved a total of 37 projects, which include 13 new projects and 24 ongoing projects with request for changes, amounting to PHP 878.3 billion. This is another notable investment in major capital projects similar to last year wherein 32 projects were approved with total cost amounting to PHP 1.44 trillion.
Game-changing Public-Private Partnerships
We issued the Implementing Rules and Regulations (IRR) of the Public- Private Partnership (PPP) Code on April 6, 2024. Complementing this effort, we also issued guidelines on the NEDA Board–Investment Coordination Committee (ICC) review and approval of PPPs requiring either ICC or NEDA Board Approval, or both. These frameworks streamline and clarify the review and approval process to eliminate bottlenecks and enhance decision-making.
This year, we witnessed the awarding of three international airport PPP projects that will promote travel and trade to foster greater economic activity in the country: the PHP170.6 billion Ninoy Aquino International Airport project; the Upgrade, Expansion, Operation, and Maintenance of the Laguindingan International Airport in Misamis Oriental; and the Bohol- Panglao International Airport. These projects will improve passenger experience by upgrading existing facilities including commercial assets, capacity augmentations, and development of commercial assets.
The NEDA Board also approved the revised parameters, terms, and conditions of the University of the Philippines-Philippine General Hospital Cancer Center. It’s a Build-Transfer-Operate PPP Project to improve our healthcare system. The project, which costs PHP9.49 billion, aims to increase access to affordable, international-quality, and comprehensive cancer treatment for Filipinos.
Connectivity for Regional Development and Inclusion
The NEDA Board approved several critical projects to improve regional connectivity. Among the notable approvals is the PHP37-billion Mindanao Transport Connectivity Improvement Project of the Department of Public Works and Highways (DPWH), which will connect Regions 10, 11, and 12. The Board also approved the expansion of Phase 1 of the Laguna Lakeshore Road Network (LLRN) Project of the DPWH, further stimulating economic activity in the NCR, CALABARZON, and Central Luzon.
Future-proofing our Healthcare System
The NEDA Board approved initiatives to strengthen Philippine healthcare, including Phase 1 of the Philippine Health Systems Resilience Project (HSRP) of the Department of Health. With a budget of PHP27.9 billion, the HSRP will focus on improving health services and boosting the country’s ability to respond to health emergencies through the building of climate-resilient provincial health systems, strengthening health emergency response systems, and advancing digital health transformation.
Accelerating Digital Transformation
To boost digital transformation in the country, the NEDA Board approved the PHP16.1 billion Philippine Digital Infrastructure Project of the Department of Information and Communication Technology. This project will construct a public broadband infrastructure network to enhance broadband connectivity and bring high-speed internet connections to disadvantaged areas, thus creating more economic opportunities for Filipinos.
To further enhance the public sector’s human resource management operations, the Board also approved the PHP3.88-billion Philippine Civil Service Modernization Project of the Civil Service Commission. The initiative focuses on streamlining and simplifying human resource information systems by implementing new technologies across various government agencies.
Infrastructure Flagship Projects
I want to note that the Government has completed three Infrastructure Flagship Projects this year, two of which address the impact of flooding. The first is the PHP12.54-billion Flood Risk Improvement and Management Project for Cagayan De Oro River; the PHP7.57-billion Integrated Disaster Risk Reduction and Climate Change Adaptation Measures in the Low-Lying Areas of Pampanga Bay Project; and the Surallah-T-Boli- San Jose Road in South Cotabato.
Enacting Priority Reforms, Advancing the Common Legislative Agenda
This year, the Legislative Executive Development Advisory Council (LEDAC) established stronger collaboration between the executive and legislative branches. The LEDAC convened three times and successfully passed 18 critical bills from the Common Legislative Agenda.
This year saw the passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy, or what is popularly known as the CREATE MORE Act. This act will further clarify and streamline existing policies concerning the granting and administration of fiscal incentives. The legislative measure helps address investor concerns and enables us to attract more strategic investments for high-quality job creation.
Other priority measures with significant fiscal implications are the Local Government Unit Income Classification Act, Ease of Paying Taxes Act, Real Property Valuation and Assessment Reform Act, New Government Procurement Act, and the Value-Added Tax on Digital Services Act.
The recent signing of the Enterprise-based Education and Training Framework Act is a significant policy development. It aims to address job- skill mismatches and support workers by providing Filipinos with lifelong learning opportunities to develop the competencies needed for career advancement aligned with local and global labor market demands.
Another notable bill passed is the Anti-Agricultural Economic Sabotage Act, which aims to enhance our governance over the agricultural sector and promote food security by further penalizing hoarding, anti-competitive practices, and other illegal agricultural activities.
At the Forefront: NEDA in 2025
NEDA is committed to continuing the work we have started to attain our medium-term social and economic transformation goals. We will continue to address Filipinos’ need for adequate income and substantial savings. Therefore, we will continue implementing policies and programs to keep prices low and stable, increase quality employment opportunities and improve Filipinos’ employability, as well as build resilience by strengthening social protection, and sustainably reduce poverty and inequality.
To fulfill our mandate to advise the President and the Cabinet on socioeconomic matters, NEDA is now working on the Philippine Development Report for 2024, which we will publish by January next year. This report will detail the milestones we have attained in implementing the PDP 2023-2028 and the lessons we have learned gleaned from the past year.
Further, as we approach the halfway point of implementing the PDP, we will begin formulating the Midterm State of the Economy Report. This report will allow us to comprehensively re-examine our priorities, policies, targets, and actions, assess our alignment with our goals, and explore the necessary adjustments. We aim to finalize and provide this to the President before his fourth State of the Nation Address in July 2025.
Aligned with this initiative, we will also update the Regional Development Plans 2023-2028 to reassess the targets and realign strategies at the regional level. To ensure alignment and linkage between regional and provincial development plans, the provincial development plan formulation guidelines shall be updated, coupled with capacity-building activities for our provinces.
NEDA will conduct the Development Partners’ Forum in 2025. The forum seeks to explore more opportunities for future collaboration with various bilateral and multilateral development partners, international organizations, line government agencies, and Official Development Assistance oversight agencies. Specifically, we want to strengthen the alignment of ODA to the PDP 2023-2028 objectives and the monitoring of their implementation.
NEDA remains steadfast in steering our country towards our collective vision of a matatag, maginhawa, at panatag na buhay para sa lahat. We look to the year ahead with much optimism, confident that we will build on the hard-won gains we have made and have learned much from the lessons of the year that is about to pass.
Again, we offer our sincerest thanks to our media partners for their continued support and service to the Filipino people.
May we have good holidays ahead. Thank you, and good morning to all!
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