Rising to the Challenge: Why Growth Slowed in 2024
The latest third-quarter GDP figure of 4% underscored a fragility in the Philippine economy, with external headwinds, supply disruptions, and domestic bottlenecks dampening momentum. To restore confidence and lift growth above the 5% target, the Marcos administration must adopt a coordinated set of policy actions that address both cyclical headwinds and structural constraints.
Macro stability and predictable policy
First, a credible macro framework is essential. This means prudent fiscal management, gradual electricity tariff stabilization, and predictable monetary conditions that support investment. The government should publish a transparent medium-term fiscal plan outlining how it will balance deficits with growth-supporting expenditures, while avoiding crowding out private investment.
Smart fiscal interventions
Targeted public investments in infrastructure and human capital continue to be a cornerstone. Priorities should include upgrading roads, logistics hubs, and port efficiency to reduce production and distribution costs. Simultaneously, sustained funding for education, healthcare, and skills training can boost labor productivity, yielding longer-term gains in GDP per worker.
Investment climate and regulatory reforms
A core driver of faster growth is an improved investment climate. Streamlining permitting, enabling faster project approvals, and curbing policy reversals create a risk environment that encourages both local and foreign capital to commit long horizons. The administration could implement a one-stop shop for major projects and establish a standardized, time-bound timeline for regulatory decisions.
Tax policy and incentives
Strategic tax reforms should focus on enhancing competitiveness without eroding revenue. This could include targeted tax incentives for high-value manufacturing, export-oriented services, and digital industries that create high-quality jobs. A simple, transparent tax regime reduces administrative costs for businesses and encourages compliance.
Energy resilience and price stability
Energy costs and reliability are pivotal for both consumer welfare and industrial competitiveness. The government should advance a diversified energy mix, accelerate renewable projects where feasible, and streamline licensing for power facilities. Establishing a pledge to shield critical industries from sharp price swings can support manufacturing and consumer demand.
Agriculture and rural development
Agriculture remains a drag on productivity and rural incomes. Policies that ease financing for farmers, promote modern farming techniques, and improve irrigation and post-harvest infrastructure can lift yields and incomes. Rural development programs should be aligned with value chain enhancements to reduce red tape and improve market access.
Trade and digital economy
Expanding trade facilitation and digital services can diversify growth drivers. Reducing non-tariff barriers, expanding logistics corridors, and promoting e-commerce ecosystems help small businesses scale. In the digital economy, investment in broadband, cyber security, and digital skills training can unlock productivity gains across sectors.
Labor market and inclusivity
Policies that improve worker skills, promote formal employment, and protect social safety nets can support aggregate demand without sacrificing competitiveness. Programs to upskill workers in aging cohorts and new entrants into higher-value industries will contribute to a more resilient growth path.
Policy coordination and governance
Finally, cross-agency coordination is essential. The Marcos administration should establish a growth council that tracks implementation, measures outcomes, and adjusts policies in response to indicators. Transparent communication about goals and progress builds public trust and investor confidence.
Conclusion: A coherent growth strategy for 2025
To arrest the slowdown, the Marcos administration must execute a coherent policy mix: credible macroeconomics, a friendlier investment climate, reliable energy, targeted reforms in agriculture and digital economy, and a governance framework that keeps projects on track. If implemented with efficiency and transparency, these steps can help lift growth above the 5% baseline and sustain momentum into 2025 and beyond.
