Rapid economic growth in the Philippines features in the recent 9th edition of the e-Conomy SEA 2024 Report by Google, Temasek, and Bain & Company. According to the report, the country is the fastest-growing digital economy in Southeast Asia, growing by 20% in Gross Merchandise Value (GMV) from USD 26 billion to USD 31 billion in 2024.
Cristina Roque, Secretary for the Department of Trade and Industry (DTI), welcomed the report, highlighting the Philippines’ ‘whole-of-government approach’ in driving economic growth, fostering innovation, and enhancing the lives of Filipinos.
We explore the shift towards a digital lifestyle in the Philippines in 2024
Some factors contributing to the growth included digitising small and medium-sized enterprises (SMEs) and startups in the Philippines and accelerating digital infrastructure and payments. Moreover, there was stabilised inflation, improved eCommerce sales, declining unemployment rates, and a revitalised services sector, among other factors.
Which startup sectors are contributing to economic growth?
The Philippines’ young and rapidly expanding startup ecosystem rose in the global rankings, placing in the 52nd position. The government passed the Startup Innovation Act in 2019 to streamline the process of starting a business and to offer incentives to founders. Thus, there is a favourable business environment and increasing digitalisation, but also several burgeoning sectors, including:
- Fintech: The country’s financial technology (fintech) market is evolving rapidly, with digital payments becoming popular. Filipinos can now depend on mobile payment wallets to instantly complete money exchanges, ranging from day-to-day transactions to investments, online banking, and digital asset trading.
Digital capital raising also makes it easier for startups to obtain funding for operations and research and development (R&D). The fintech sector contributes to economic growth by offering payment services through smartphone apps, enabling investments through cryptocurrencies, enhancing financial inclusion for rural communities, and allowing remote and secure transactions.
- eCommerce: Closely related to fintech is the eCommerce sector, which relies on online buying and selling through platforms and payment service providers. The market has grown by about 400% in the past five years due to increased internet penetration, tech infrastructure improvements, and the region’s highest average daily internet usage. The leading payment methods are through GCash and PayMaya mobile wallets.
Furthermore, the Philippines is adopting Buy Now, Pay Later (BNPL) payment schemes through companies like Klarna and Grab PayLater. Aside from online marketplaces, Filipinos are also using social commerce, where sellers use social media to promote, display, and sell their products and services to online audiences.
- Education: Positioning the Philippines as a growing tech hub in Southeast Asia requires adequate access to quality education for all Filipinos of all ages. Children need foundational lessons, whereas adults need reskilling to meet the modern-day job requirements that involve technology. Edtech startups enable educators, parents, and students to learn via digital platforms and obtain informational resources on-demand.
Examples of growing edtech startups include Edusuite, CloudSwyft, and Avion School, which provide future-ready tech skills and course modules to prepare their students for our digitalising society and industries. The sector trains workers and offers job opportunities to educators and software engineering experts who can design user-friendly learning platforms.
- Healthcare: The health sector has room for growth, with public healthcare satisfaction at a low 29% rate. As Statista notes, the government introduced the Universal Health Care (UHC) Act in 2019 to automatically enrol Filipinos in a National Health Insurance Program (NHIP) administered by the Philippine Health Insurance Corporation (PhilHealth). Thus, spending increased, access improved, and more medical facilities were opened or expanded.
Demand for healthcare professionals is now high, and facilities are adopting various technologies to improve the quality of care. Healthtech solutions such as telemedicine enable Filipinos to attend doctor consultations remotely and receive treatment. Ultimately, improving public health lowers costs and reduces economic strain.
- Agriculture: The Philippines is an agricultural country, meaning the majority of citizens work and sustain themselves through farming. Plus, a quarter of employed Filipinos work in the sector, helping to power the economy through trade and exports.
Even though climate change concerns have hampered the agricultural industry due to natural disasters like floods, eco-friendly startups are finding solutions to enhance resource sustainability and food security. They are using innovative technology to make plant-based packaging, reduce greenhouse gas emissions, generate renewable energy, and enable farmers to access financing and grow crops efficiently.
The potential of Filipino startups
Startups in the Philippines are poised to impact communities and the nation’s economy significantly. The e-Conomy SEA Report 2024 underscores the country’s population of 119 million as a substantial market for various sectors. With increased digitalisation and tech adoption, the government and businesses can tap into this potential to generate more revenue.
To safeguard economic growth in the Philippines, the government should subsidise technology costs to enhance adoption, encourage investment, and combat cybercrime. Overall, the country is well-placed to shape a more resilient digital economy that provides all Filipinos access and improves multiple sectors.