As-Delivered Statement of NEDA Secretary Arsenio M. Balisacan
on the Philippine Economic Performance
for the Second Quarter of 2024

08 August 2024 | Philippine Statistics Authority

 

Esteemed members of the media,

Fellow Filipinos,

Ladies and gentlemen,

Good morning to you all.

Today, we are pleased to announce that the Philippine economy has sustained its robust growth trajectory, demonstrating resilience amid various domestic and external challenges.

As reported by Undersecretary Dennis Mapa, our gross domestic product (GDP) growth has accelerated to 6.3 percent in the second quarter, faster than the adjusted 5.8 percent growth rate recorded in the first quarter of 2024. This significant development brings our real GDP growth to 6.0 percent for the first half of the year, keeping us on track to achieve our target growth rate of 6 to 7 percent for 2024.

This performance keeps our position as one of Asia’s best-performing major emerging economies. For East Asia’s economies that have released their second quarter 2024 GDP growth, we follow behind Vietnam at 6.9 percent while leading Malaysia at 5.8 percent, Indonesia at 5.0 percent, and China at 4.7 percent.

Among the major economic sectors, industry and services posted year-on-year solid growth in the second quarter, at 7.7 percent and 6.8 percent, respectively. However, the agriculture sector experienced a year-on-year decline of 2.3 percent, with the sector adversely affected by the El Niño phenomenon.

On the demand side, the acceleration in GDP growth was driven by a significant increase in total investments by 11.5 percent, fueled by robust construction activities. Public construction sustained double-digit growth (21.8 percent from 12.1 percent) as the government’s infrastructure agencies expedited the rollout of the Marcos administration’s construction and rehabilitation projects. Encouragingly, private construction likewise accelerated (9.9 percent from 5.3 percent), particularly commercial construction (13.6 percent from 6.8 percent). Meanwhile, the notable increase in government final consumption expenditure by 10.7 percent was mainly driven by the timely implementation and expanded coverage programs of various social protection, health, and education programs, coupled with the preparatory activities for the 2025 National and Local Elections.

The country’s sustained and robust growth performance has led us to observe record employment numbers. Just yesterday, the Philippine Statistics Authority reported that the unemployment rate again reached 3.1 percent in June 2024, tying our record low in almost two decades as the total number of employed persons exceeded 50 million. We have also been observing a downward trend in underemployment, indicating the availability of better-quality jobs for our people. In the previous month’s report, the underemployment rate was estimated at 9.9 percent in May 2024, the lowest since 2005.

It is also encouraging to see that economic growth is broadly inclusive: our efforts to combat poverty have yielded significant results. As reported last month by the PSA, poverty fell from 18.1 percent in 2021 to 15.5 percent in 2023, translating into 2.45 million Filipinos lifted out of poverty. This accomplishment surpasses the Philippine Development Plan (PDP) target of 16.0-16.4 percent for 2023, highlighting the effectiveness of our policy measures and the resilience of our economic strategies. Meanwhile, food-poor Filipinos decreased from 6.55 million in 2021 to 4.84 million in 2023, marking a reduction of 1.71 million individuals. Income growth for the poorest deciles–the bottom 20 percent of our population–was faster than those of the richer deciles and higher than the rate at which the poverty threshold increased owing to inflation between 2023 and 2021.

While inflation was faster at 4.4 percent in July 2024, we expect it to revert to its longer-term downtrend as we aim for our target range of 2 to 4 percent. Year-to-date, average inflation from January to July 2024 stands at 3.7 percent.

While these numbers are encouraging, our growth performance could have been even more impactful on all Filipinos if not for the high inflation and interest rates that the country experienced in the last two years. Considering the lagged effect of interest rate hikes that the Bangko Sentral ng Pilipinas carried out in response to the high inflation in 2022 and early 2023, we estimate that economic growth could have been over half a percentage point higher in 2023 if such rate hikes did not materialize. More importantly, with slower increases in food prices, our efforts could have reduced the poverty incidence to around 13 to 14 percent in 2023—instead of the actual reported figure of 15.5 percent– if inflation had been within target during the year. This would have translated to an even higher reduction in the number of poor people by 4.4 million instead of the actual reported 2.5 million between 2021 and 2023.

Therefore, as we continue to progress across various socioeconomic indicators, we focus on sustaining this momentum and ensuring that the benefits of economic growth are shared equitably.

President Marcos began his 2024 State of the Nation Address with one of our most urgent priorities: the government will continue its push for food security by managing food inflation with appropriate supply-side measures. In the near term, we commit to utilizing strategic trade policy to augment insufficient domestic food supplies to meet rising demand. To protect our people from such economic shocks and sustain the momentum for poverty reduction, the government will likewise expedite the rollout of social protection programs for the poor and vulnerable sectors, including enhancements to the Department of Social Welfare and Development’s Food Stamp Program and the 4Ps Program. The accelerated implementation of the National ID use cases will be instrumental in this endeavor.

As we have also said, the government’s medium-term game plan is to implement strategic policies and programs focused on raising agricultural productivity and improving farmers’ incomes and competitiveness through a whole-of-government approach toward strengthening our infrastructure, logistics networks, and markets for agricultural inputs and outputs. The Marcos administration will fast-track digitalization to enhance data-driven decision-making and drive innovation among actors in the sector. And it commits to strengthening the country’s disaster management to mitigate the impact of extreme weather, including the looming threat of La Niña, on our people’s lives and livelihoods.

Keeping food inflation and interest rates manageable is expected to spur both consumption and investment activity among households and businesses, strengthening our economic growth prospects in the coming months and the medium term.

Improving Filipinos’ purchasing power abilities also means that we will relentlessly pursue high-quality job creation even as we are making steady progress in our employment statistics. The government is working earnestly to improve the policy and regulatory environment further. The goal is to strengthen our growth pillars–beyond household consumption and the services sector– and foster a more diversified mix of industries to sustain the growth of the Philippine economy in the years to come, speeding up poverty reduction and socioeconomic transformation.

To drive investment, we are advancing critical reforms to enhance the investment climate, transforming critical sectors such as energy, water, and telecommunications, and simplifying the ease of doing business. Implementing the PPP Code of the Philippines is expected to bolster and expand private-sector participation in the country’s infrastructure development. Through the Infrastructure Flagship Projects or IFPs, under the Build-Better-More program, we aim to create favorable conditions for business expansion, improve regional connectivity by linking leading and lagging areas, and elevate the competitiveness of our local industries.

Equally important is our commitment to investing in human capital. While physical infrastructure development is essential, addressing the long-neglected social sectors, particularly health, education, and social protection, is imperative. Strengthening these areas will enable us to harness and fully reap the benefits of the demographic dividend as we expect more and more Filipinos to join the labor force.

We are developing the Trabaho Para sa Bayan (TPB) Plan to address employment challenges and align educational outcomes with market demands, empowering Filipinos to succeed in a dynamic environment.

Together, these initiatives lay a strong foundation for sustainable and inclusive growth. Our goal is to drive substantial investments in both physical and human capital to generate more and better jobs offering higher wages, enhance the competitiveness of our economy, and, most importantly, reduce poverty to single-digit levels by 2028—a commitment that we intend to meet.

Amid evolving risks and challenges, the Philippines’ economic outlook remains promising in the near and medium term. By adhering to the Philippine Development Plan and learning from the lessons and experiences over the last two years, we will ensure that our strategies propel us in the right direction as we move closer to our vision of a strongly rooted, comfortable, and secure life for every Filipino.

Thank you, and good morning to all.

-END-