THE digital economy’s contribution to the Philippine economy was little changed at 8.5% in 2024 from 8.6% previously, the Philippine Statistics Authority (PSA) reported on Tuesday.
Citing preliminary data, the PSA said the 8.5% reading was the lowest since the PSA started compiling the indicator in 2018.
In terms of gross value added, digital grew 7.6% to P2.25 trillion last year from P2.09 trillion in 2023, with growth slowing from 8.8% in 2023 and the weakest reading since the 8.6% contraction in 2020 during the pandemic.
According to the PSA, the digital economy is composed of digital transactions covering digital-enabling infrastructure, e-commerce, digital media and content, and government digital services.
Economy Secretary Arsenio M. Balisacan called digitalization a priority, citing the Philippine Development Plan (PDP).
“It is a top thrust of our government, digitalizing not just in the public sector but also the way the private sector deals with government. That is why there is so much effort put into digitalization,” Mr. Balisacan told reporters on the sidelines of an event on Tuesday.
He added that the central bank has also been pushing for digitalization, particularly in the financial sector, to enable inclusive finance.
Mr. Balisacan said the Philippine digital economy is starting from a low base relative to neighbors in the region.
The PDP 2023-2028 contemplates a digital transformation that will result in more efficient and faster service delivery, more transparency, and fewer opportunities for corruption at various levels.
The dip in the digital economy’s contribution to economic output can be attributed to the faster recovery of traditional industries like construction, manufacturing, and tourism, which expanded sharply as the economy fully reopened, John Paolo R. Rivera, a senior research fellow at the Philippine Institute of Development Studies said.
“As these offline sectors grow, even if the digital economy expands, its relative weight in the total economy naturally declines unless it grows even faster than the broader GDP,” Mr. Rivera said via Viber.
In 2024, the economy expanded by 5.7%, outpacing the 5.5% expansion in 2023 and the highest reading since the 7.6% posted in 2022, the PSA reported.
Digital-enabling infrastructure accounted for P1.88 trillion or 83.8% of the sector’s total gross value added in 2024.
E-commerce accounted for 13.5% or P302.31 billion in 2024. This was followed by digital content and media with 2.4% or P53.98 billion and government digital services with 0.3% or P6.6 billion.
In 2024, 11.30 million workers were employed in the digital industries, up 4.8%.
Last year, employment in the e-commerce industry accounted for 77.9% of the sector, followed by digital-enabling infrastructure with 21.4% or 2.4 million, digital content and media (0.7% or 79,390), and government digital services (0.1% or 5,820).
Mr. Balisacan expects the digital economy to contribute more in the near term.
“What you expect is, new tools are developed, new applications are developed, new industries arise also out of those technologies and data. So that’s what will drive the digital economy, data and applications,” he said.
Mr. Rivera said the growth of the digital economy reflects its role as a key driver for economic growth.
“Moving forward, growth in this sector will likely remain strong, fueled by e-commerce, digital finance, health tech, AI applications, and remote services, although bottlenecks in digital infrastructure and regulatory challenges must be addressed to unlock its full potential,” Mr. Rivera said. — John Phoebus G. Villanueva