The Marcos Jr government inadvertently stirred a little more hope for 2025 with its budget debacle at the end of 2024. The controversial fiscal mispriorities saw citizens across the nation – and social media – calling out legislators and the president for a budget that prioritized pork barrel and the interests of a few over the people’s needs for services and an equitable economy. The pork-infused national budget however is just the tip of the iceberg.
Public awareness and demands for a better budget are essentially demands for an economic framework that prioritizes the welfare of the many over the interests of the few. This is a potentially powerful foundation for better economic policymaking in 2025 and beyond.
More isn’t better
The need for better policymaking is undoubtedly considerable. The government wants to tell a story of economic success, and to be sure, there are some numbers that help them do this. Growth was relatively rapid, inflation has moderated, and some employment figures look favorable.
Gross domestic product (GDP) growth in the first three quarters of last year ticked up to 5.8% from 5.6% in the same period the year before. This was among the fastest in the region, as the economic managers like to keep repeating. Inflation slowed to 3.2% in 2024 from 6% 2023. Even the unemployment rate dropped to 3.9% in October 2024 from 4.2% from the year before.
Is the economy all good then? The numbers are presented out of context though and don’t tell the whole story.
The most important thing about the economy is exactly what the government is trying its best to cover up – a few have prospered, but poverty and hunger have been growing since the start of the Marcos Jr administration.
Growth is rapid, but its benefits are concentrated among the country’s elites. The net income of the Philippine Stock Exchange’s (PSE) 284 listed firms grew by 6.6% to Php947.3 billion in the first nine months of last year from the same period the year before. The combined wealth of the three richest Filipinos — Enrique Razon Jr, Manuel Villar, and Ramon Ang — increased by 25% to Php1.5 trillion in 2024, or Php294 billion more than in 2023.
Inflation is lower, but prices are still higher and more and more Filipinos have less and less to spend. According to the Social Weather Stations (SWS), since the start of the Marcos Jr administration in June 2022, the number of self-rated poor grew by 4.1 million to reach 16.3 million families or almost six-out-of-ten families (59%) by September 2024; the number of hungry families grew by 3.4 million to reach 6.3 million over that same period.
These magnitudes are generally consistent with how the Bangko Sentral ng Pilipinas (BSP) reported that the number of households without savings grew by 1.5 million since the second quarter of 2022 to reach a huge 20.1 million by the fourth quarter of 2024, which is nearly three-out-of-four households (74%). Another private survey outfit, WR Numero, reported that respondents who had “difficulty meeting expenses for basic needs” reached 69.5% in September 2024.
Employment seems to be up, but these are jobs that pay little or don’t pay at all; unemployment seems to be down, but millions of jobless are excluded from the official count. Poverty and hunger increasing despite supposedly rising employment in October 2024 is the most important proof that the jobs supposedly being created are less and less gainful.
Official employment figures don’t say anything about how much is earned from supposed employment, and actually includes 2.8 million officially categorized as “unpaid family workers”. Meanwhile, official unemployment figures exclude millions of discouraged job-seekers by classifying them as “not in the labor force”, preventing them from being counted.
Less becomes lesser
The short of it is that the political system captured by the elite produces economic policies that keep them rich while leaving most Filipinos behind. Underlying all this are significant structural challenges for the economy.
Agriculture and manufacturing are at historic lows in their share of the economy. Agriculture’s share of GDP has fallen even further from 8.6% in 2023 to 7.8% in the first three quarters of 2024 – this is the smallest in the country’s history. Over that same period, manufacturing’s share of GDP in turn has fallen further from 18% in 2023 to 17.3% – this is its smallest share since the 16.3% in 1949.
These figures are behind economic productivity stagnating for nearly five years now. Measured as GDP divided by total employment, productivity since 2020 is over 6% lower than in 2019 – indicating how greater economic output has actually been accompanied by less to go around. These weak economic foundations are also the ultimate cause of the shortage of quality jobs.
Fiscal space is meanwhile limited by tax cuts on the rich, relentless debt service, and unrepentant pork barrel of politicians. As much as Php150 billion or more is foregone annually in corporate income tax cuts from the CREATE and CREATE MORE laws that the government gifts corporations with, especially large firms. The country’s estimated 3,000 billionaires are meanwhile spared from a wealth tax even if they are evidently the biggest winners from current economic policies, many of which they crafted through the political parties they control.
Letting profits and wealth to remain concentrated in the hands of a few is a major factor driving public debt. Despite Php2 trillion in debt service last year and over Php2 trillion more this year, national government debt is set to keep growing to Php17.3 trillion by the end of 2025. The growing perception of unsustainable debt combines with distorted spending priorities to fuel public outrage of the government’s fiscal priorities.
Filipinos deserve more
This isn’t the best kind of economy to get the people through 2025. Geopolitical and trade tensions from inter-imperialist conflicts mix with the volatility and political unrest from stubborn global economic stagnation. More domestic-oriented policies are needed to navigate increasing United States (US) protectionism, the Chinese economic slowdown, and distressed European and Japanese economies.
The disruption of the global economy by foreign investment controls and trade wars is inevitable. It is long overdue for the Philippines to stop relying on the muscle memory for outdated neoliberal policies of the traditional political leadership and economic managers. Countries around the world are becoming more assertive of their economic sovereignty and the Philippines should do no less.
The country’s economic model is broken. Historically, especially since the 1970s, the model has been to continue trying to attract foreign investment, to take away trade protections, and to let private profitability dictate what and how goods and services are produced. The government meanwhile does all it can to support the profits of the biggest corporate elites and wealth of the richest families, providing as little social services as it can get away with. This model has made a few prosperous but has not delivered development nor produced real economic progress.
It is exactly the time for the Philippines to radically rethink its economic relations with the rest of the world and, in particular, with the large capitalist powers which have stifled domestic industrial development for so long because of how this runs contrary to their self-interest for cheap labor, raw materials, and a captured market.
The country has options for more genuinely development-oriented fiscal, monetary and structural economic policies. Among the multiverse of economic directions, the most immediately viable for the Philippines is for democratic state intervention to complete agrarian reform and develop the rural economy, expand publicly-provided social services, and aggressively pursue national industrialization.
The May 2025 elections are the first major test this year of where the economy is headed. This is because the narrow-minded elites holding power and indulging in self-interested policymaking are a binding constraint. Although just mid-term elections, they are an opportunity to elect progressive political leaders bold enough to reimagine and reshape the country for the better. Growing dissatisfaction with the performance of elected officials according to surveys – with public ratings of the president and vice-president falling – is actually an encouraging sign.
Also, the huge opportunity from an increasingly enlightened, enraged and emboldened public cannot be underestimated. The will to change will come from resurgent social and mass movements – the source of real hope for 2025 and the years to come.
