Tourism contributes 8.9% to Philippine GDP in 2024

The share of the tourism industry in the Philippine economy rose to a five-year high of 8.9% in 2024, the Philippine Statistics Authority (PSA) said on Thursday.

Tourism direct gross value added (TDGVA) — an indicator of the economic contribution from tourism-related activities — jumped by 11.2% year on year to P2.35 trillion last year, preliminary data from the PSA showed.

However, TDGVA growth was slower than the 49.9% surge logged in 2023 and the slowest annual growth since the 10.3% expansion in 2020.

Despite the slower growth, the share of TDGVA to the economy rose to 8.9% in 2024, the highest share since the 12.9% recorded in 2019.

By industry, country-specific tourism characteristics goods – shopping accounted for 21.8% of the total with P512.68 billion. It was followed by miscellaneous services (20.2% share or P476.23 billion) and accommodation services for visitors (18.4% share or P432.9 billion).

Domestic tourism expenditure, which includes resident visitors’ spending within the country on a domestic trip or as part of an international trip, grew by 16.4% to P3.16 trillion last year.

Outbound tourism spending reached P345.68 billion in 2024, rising by 37.5% from P251.35 billion in 2023.

Inbound tourism expenditure, meanwhile, inched up by 0.4% annually to P699.99 billion.

Total employment in the tourism sector grew by 6.1% to 6.75 million in 2024. Tourism accounted for 13.8% of the total jobs in the country in 2024.

The majority of the tourism-related jobs were centered on miscellaneous activities. The health and wellness sector employed 1.83 million, accounting for a 27.1% share.

The accommodation and food and beverage sector had 1.69 million workers (25% share), while passenger transport had 1.67 million workers (24.7%).

Reinielle Matt M. Erece, an economist at Oikonomiya Advisory and Research, Inc. said easing inflation helped boost tourism spending last year.

“Lower inflation relative to 2023 and better economic conditions in the country may have encouraged tourists due to better prices,” he said.

Inflation averaged 3.2% in 2024, cooling from the 15-year high of 6% in 2023.

Last year, the Department of Tourism recorded 5.95 million visitor arrivals, falling short of its 7.7 million target.

“While Philippine tourism has made substantial progress — particularly in revenue generation — it hasn’t achieved full recovery in terms of visitor numbers, and the pace of recovery appears to be slowing in early 2025,” Leonardo A. Lanzona, Jr., an economics professor in Ateneo de Manila University, said.

Mr. Erece is optimistic that tourist numbers will improve this year.

“The strong domestic economy can also be a positive factor in improving local economies and their respective tourism potential,” he said.

Source: Business World

SME support to lift PH growth prospects

Providing support to high-potential small and medium enterprises (SMEs) could boost economic activity and make the Philippines more resilient, the World Bank said.

"The Philippines can further boost its growth prospects by implementing vital reforms that empower SMEs to flourish," the Washington-based multilateral organization said in its Philippine Economic Update report.

As SMEs account for 63 percent of the country's total employment and contribute 36 percent to gross value added, supporting these small businesses can unlock the potential for increased economic dynamism.

The World Bank has trimmed its forecast for Philippine economic growth to 5.3 percent for this year from 6.1 percent previously. Marginal gains of 5.4 percent and 5.5 percent are expected for 2026 and 2027, but all projections fall below the government's 6.0- to 8.0-percent target.

Many SMEs still have low productivity and face difficulties in growing due to limited access to financing, the World Bank said. As a result, they export less and are less involved in global value chains compared to other SMEs in East Asia and the Pacific.

"Regional and global value chains are more than just sales outlets; they are platforms for creating quality jobs and more value-added through benefits from scale, increased competition, and learning," World Bank senior economist Jaime Frias said.

"Firms that engage with international markets are generally more productive, in part because it takes high productivity to export, but also because exporting makes them more productive," Frias added.

The World Bank said SMEs faced several challenges in growing their exports and joining regional and global supply chains. These include limited access to testing and certification services, lack of financing for equipment and quality upgrades and not enough market information to connect with buyers.

It stressed that improving access to testing and certification services would require investments to make this more affordable.

The World Bank also called for simpler rules for laboratories and importing testing equipment and efforts to gain international recognition for Philippine certifications and standards.

Investing in credit information and collateral registries, it added, can help lenders better assess SME risks. This can lower borrowing costs and allow SMEs to invest in better equipment and improve product quality.

"The government can enhance firms' competitiveness by promoting information sharing, which benefits both SMEs and larger companies," the World Bank said.

"This involves closing information gaps by providing easy access to export market data and establishing systems to connect SMEs with larger firms and multinational corporations."

Source: Manila Times

S&P hikes PHL growth forecasts until 2027

S&P Global Ratings expects the Philippines to be the second fastest-growing economy until 2027, as it raised its growth projections.

In its Economic Outlook for Asia-Pacific, S&P Global Ratings said Philippine gross domestic product (GDP) will likely expand by 5.9% this year from 5.7% previously.

For 2026, it expects Philippine GDP to grow by 6% from 5.9% previously.

S&P Global Ratings now projects Philippine GDP growth at 6.6% in 2027 from 6.4% previously.

Based on S&P’s latest projections, the Philippines and Vietnam will post the second-fastest expansion in Asia-Pacific this year until 2027.

India is expected to lead the region, as its GDP is projected to grow by 6.5% this year, 6.7% in 2026 and 7% in 2027.

For 2028, S&P Global Ratings said Philippine GDP will likely expand by 6.5%, the third-fastest in the region after India (6.8%) and Vietnam (6.6%).

“(The) upward revision from our forecasts published in May was driven by the sharp reduction of bilateral tariffs between the US and China, which came after the pause in the country-specific ‘reciprocal’ tariffs by the US. These somewhat reduced the downsides around global trade and growth,” S&P Global Ratings Senior Lead Economist Vincent Conti said.

US President Donald J. Trump announced higher reciprocal tariffs on most of the country’s trading partners, with Philippine goods facing the second-lowest rate in Southeast Asia at 17%.

However, the reciprocal tariffs have been paused for 90 days until July. A baseline 10% tariff remains in place.

“We nevertheless expect global trade uncertainty to be substantially higher than before January, and that would in turn provide a key headwind for investment in the Philippines,” Mr. Conti added.

S&P Global Market Intelligence Principal Economist Harumi Taguchi said the direct impact of the US tariffs on the Philippine economy is still “relatively smaller” compared with other Asia-Pacific economies.

“The magnitude of impact, including the indirect impact, depends on these scenarios. In any case, this tariff will slow global economic growth and disrupt the supply chain,” she said on Money Talks with Cathy Yang on One News.

Meanwhile, S&P Global Ratings sees the Philippines’ benchmark rate ending at 5% this year, which implies another 25-basis-point (bp) cut by the central bank this year.

“With inflation not a major risk, more focus on growth risks and external factors unlikely to significantly constrain monetary policy easing, we expect Asia-Pacific central banks to continue to cut policy rates,” it said in a report.

Last week, the Bangko Sentral ng Pilipinas (BSP) reduced the target reverse repurchase rate by 25 bps to 5.25% from 5.5% amid a moderating inflation outlook and weaker growth.

The Monetary Board’s remaining policy meetings this year are scheduled for Aug. 28, Oct. 9, and Dec. 11.

S&P Global also expects Philippine inflation to average 2.3% this year, within the 2-4% target. It also projects inflation to settle at 3.2% in 2026, 3.3% in 2027 and 3% in 2028.

The BSP forecasts inflation to average 1.6% this year, 3.4% in 2026 and 3.3% in 2027.

Source: Business World