Economic Update – June 2024 ( www.robertgsarmiento.com )
As of mid-2024, the Philippine economy is experiencing moderate growth, with various sectors contributing to its expansion. The economy rebounded with a 1.7% growth rate in the first quarter of 2024, primarily driven by consumer spending and manufacturing (McKinsey & Company).
Interest Rate = 6.5%
U.S. Dollar to Philippine Peso = Php 58.87 to $ 1
Export Demand = + 5.8% ( IMF )
Tourist Arrival = + 18.3% ( IMF )
Inflation = 3.6% ( IMF )
GDP Growth = 5.9% ( IMF )
Recent Trends:
In the first quarter of 2024, FDI inflows rose significantly by 42.1%, reaching $3.0 billion compared to $2.1 billion in the same period last year. This increase reflects growing investor confidence in the Philippines due to its strong growth prospects and moderating inflation (Manila Standard).
Industries Receiving Investments:
Manufacturing: A key sector attracting FDI, contributing approximately 19% of the GDP. Investments in this sector are driven by the country's role in regional trade and the trend of nearshoring, particularly in semiconductor manufacturing, which is a major export for the Philippines (McKinsey & Company).
Financial and Insurance: This sector also sees substantial foreign investments, leveraging the growing need for financial services and insurance in the expanding economy.
Real Estate: With ongoing urban development and infrastructure projects, real estate remains a significant recipient of foreign capital (Manila Standard).
Sources of FDI:
The primary sources of FDI into the Philippines include Japan, Singapore, and the United States. These countries have been consistent investors, particularly in manufacturing, financial services, and real estate sectors (Manila Standard).
Poor infrastructure ( although this is work in progress, much has improved but as always sentiment takes awhile to sink in ), high power costs, slow broadband connections / intermittent, regulatory inconsistencies, cumbersome bureaucracy, and corruption remain disincentives to investment.
Policy Environment:
Recent amendments to the Foreign Investments Act have made it easier for foreign investors to enter the Philippine market. These changes include reduced capital requirements for foreign-owned small and medium-sized enterprises and incentives for startups and innovative companies. Such policy reforms aim to create a more welcoming environment for foreign investors, fostering long-term investments and job creation (Conventus Law).
Economic Outlook
The outlook for the Philippine economy remains positive, although it faces challenges such as inflation and supply chain issues. Continued efforts in policy reform, infrastructure development, and investment promotion are expected to support sustained economic growth and attract further foreign investments in the coming years.
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PRC REBL # 6569
