This is the second time in a row that President Ferdinand Marcos Jr. missed his own economic growth targets.
In 2023, his administration set a 6-7% target. GDP, or gross domestic product, grew by just 5.5%.
Then on Thursday, January 30, 2025, the government released the 2024 figures, showing that GDP grew by a mere 5.6%. That also fell short of the target of 6-6.5%.
With yearly growth lower than 6% per year, I can’t help but feel embarrassed for the Marcos administration. From 2012 to 2019, growth never fell below 6%, and the average for that period was an impressive 6.6%.
But slow growth is unsurprising because the Philippine economy’s main driver, consumption spending, has dramatically weakened since 2022. This is mainly on account of the very steep increase of prices (or high inflation) from 2022 to 2023.
Figure 1 shows that the green bars, denoting the contribution of consumption to growth, are much smaller than they used to be. Before the pandemic, consumption contributed more than 4.2 percentage points to growth per year. But in 2024, that contribution dwindled to about 3.5 percentage points per year.
The thing is, Filipinos are not going out to buy as much food as before, deterred by the prohibitively high prices. Because food is such a huge part of a typical household’s budget, a slowdown in food spending tends to drag down overall growth.
Figure 1.
But it’s not just food. Investment spending, particularly construction by households and corporations, remained weak, likely because of the sky-high interest rates set by the Bangko Sentral ng Pilipinas — which are, in turn, designed to quell inflation. (When inflation abated, the BSP started lowering interest rates in August 2024.)
Heck, even government construction and spending in general have not contributed so much to growth. This seems counterintuitive, because of the many “hyperlocal” projects being built by local leaders, as well as the big-ticket infrastructure projects of the Marcos administration (like the Metro Manila Subway).
But people tend to overestimate the size of government construction projects in general: in 2024, it was just 6% of GDP. And government can certainly do better in disbursing money for infrastructure projects, if not for pesky right-of-way constraints and lack of absorptive capacity in the Department of Public Works and Highways and the Department of Transportation.
Most recently, the Marcos administration even defunded big-ticket infra projects by putting them in the national budget’s unprogrammed appropriations. In doing so, Marcos basically sabotaged his own legacy infrastructure program. No wonder public construction spending is so weak.
On the production side of GDP, services continue to contribute a lot to growth. But agriculture and industry are lagging behind.
It’s not new to see this performance of agriculture. But the total output of agriculture and fishing in 2024 was just P1.72 trillion, the lowest since 2016 or in eight years. The total value of agricultural production as a whole also seems to be plateauing of late. We don’t have space here to study the many ills of agriculture, but I’ll just refer you to a recent series of columns in the Manila Times by my friend and colleague, Dr. Fermin Adriano, an agricultural economist and former agriculture undersecretary.
Meanwhile, Figure 2 shows the weakening of industry, specifically construction and manufacturing. Now that interest rates are expected to go down, perhaps more construction activities will resume across the country.
What we really need to work on is manufacturing, which is still one of the most productive sectors on a per-worker basis. To boost manufacturing, we will need to significantly improve the Philippines’ business climate and attract much more foreign investments. Vietnam, for instance, was able to boost its manufacturing and exports when Samsung and Apple, and many other multinationals chose to locate there.
The problem is that the Philippines is excellent in repelling rather than attracting investors, for many reasons we’re familiar with: weak rule of law, corruption, lack of infrastructure, etc.
Figure 2.
Dire picture, nice words
Amid the dire economic picture painted by the statistics, government officials are busy with their propaganda.
Just a week before the latest GDP figures were released, Secretary Arsenio Balisacan of the National Economic and Development Authority (NEDA) said the country’s growth remained “impressive” despite missing targets. He said, “We fall short of the target but that’s understandable, as I said, because of the external and domestic factors that are outside of our control.”
A few days ago, in Davos, Finance Secretary Ralph Recto touted the Philippines as a “key destination for global investments.”
President Marcos, for his part, said in a recent NEDA Board meeting, “I’m quite satisfied. I’m even proud. I would go as far as saying I’m proud of the things that we have achieved.” Imagine you’re a student failing two consecutive exams, justifying your performance using the exact same words. Doesn’t make a lot of sense.
Then in response to the official GDP figures for 2024, NEDA issued a lengthy statement. Rather than chase higher growth numbers, they said, the country should emphasize the need to build resilience and adaptability. Much blame was put on the string of typhoons, which hit the agriculture sector in 2024, as well as the slow global recovery.
Sure, external factors were at play. Inflation hit most countries of the world in 2022, not just the Philippines. And the International Monetary Fund said that global growth in 2024 was “in a sticky spot” and “underwhelming.”
But we should ask ourselves: how did Vietnam, which until recently was poorer than the Philippines, manage to achieve a 7.5% growth rate in 2024? Wasn’t it also hampered by the global factors that NEDA was talking about?
We can blame foreigners only up to a certain extent. Consumption wouldn’t have slowed down if the Marcos administration were able to manage inflation well. Marcos, who appointed himself concurrent agriculture secretary early in his term, was in a good position to manage food supplies well — but failed to do so.
Public construction also wouldn’t have slowed down if Marcos did not approve the 2024 budget which placed so many big-ticket projects under the budget’s unprogrammed appropriations. Because he repeated this in 2025, expect construction growth to contribute little to the economy yet again.
Marcos’ economic legacy
Finally, I want to note that the 2024 GDP figures confirm that we’re now on a permanently lower growth path.
Figure 3 shows the pre-pandemic trend of GDP and how we veered off-course in 2020. If the pandemic had not happened, we would be on the purple trend.
The pink trend, actual GDP, shows that since 2020 we have settled on a new and lower path than the pre-pandemic forecast. In other words, our national income now is a lot lower than what we could be enjoying if the pandemic had not happened.
Figure 3
The task is to get back to the pre-pandemic trajectory asap. But to do this by 2028, or the end of Marcos’ term, my calculations suggest we’ll need annual growth of 11.4% from 2025 to 2028. That’s more than twice the economy’s growth rate in 2024.
Is this shaping up to be Marcos’ economic legacy? That he miserably failed to bring the economy back to its pre-pandemic trajectory during his term? – Rappler.com
JC Punongbayan, PhD is an assistant professor at the UP School of Economics and the author of False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them. In 2024, he received The Outstanding Young Men (TOYM) Award for economics. Follow him on Instagram (@jcpunongbayan) and Usapang Econ Podcast.