The Philippine economy is stumbling and on the verge of decline due to the worsening poverty and joblessness that the Marcos Jr administration is dismissing, said research group IBON. Latest official growth figures show household consumption weakening from the unresolved jobs crisis and low incomes, investment dampened by narrowing domestic and export markets, and government spending that isn’t enough to stop the economy from slowing.
Annual gross domestic product (GDP) growth increased negligibly by 0.1% to 5.6% in 2024 from 5.5% in 2023. IBON said that this is because the increasing lack of decent work and impoverishment leaves Filipino families with little or no money to spend.
The group said that household final consumption expenditure (HFCE) has always made up the biggest share of spending in the economy – around 70-75% of the GDP. However, household consumption has been generally slowing for the last 11 quarters, from 10% in the first quarter of 2021 to 4.7% in the fourth quarter of 2024.
Weakening household consumption disincentivizes domestic and even foreign capital wary of investing in a market with no promise of substantial returns, said IBON. Poorer export prospects from the sluggish global economy also dampen investment.
The foreign direct investments (FDI) that the government overly relies on to boost the economy has been slowing. From US$12 billion in 2021, this has decreased to US$9.5 billion in 2022, and US$9.1 billion in 2023. In the first ten months of 2024, FDI was at US$7.7 billion, slightly higher than the US$7.1 billion in the same period the previous year. This is not expected to increase substantially for full-year 2024.
The group said that the administration is attempting to spend its way out of decline. However, this appears futile as government expenditures weaken. The group noted that government final consumption expenditure (GFCE) has been on an overall downtrend. From the 16.2% growth in the first quarter of 2021, this has fallen to 9.7% in the fourth quarter of 2024.
The government is less and less able to indulge in debt-driven spending. As it is, the government is already spending more and more to just pay off debt. National budget allocations for debt servicing increased from Php1.6 trillion in 2023 to Php2 trillion in 2024 and Php2.1 trillion in 2025. Yet outstanding national government debt is still rising from Php12.8 trillion pesos in June 2022 at the start of the Marcos Jr administration to Php16.1 trillion as of November 2024, projected to reach Php17.4 trillion at the end of 2025.
IBON stressed that the days of rapid growth are over amid worsening joblessness and poverty. The government needs to abandon its blind hope in foreign investments to save the economy and that it can spend its way out amid increasing debt. It is high time to shift to a new and effective way of strengthening the economy through domestic-driven, equitable, agriculture-based, Filipino industrialization, said the group.