THE PHILIPPINE digital economy is expected to remain robust this year amid the continued growth of the e-commerce and financial technology (fintech) sectors and increased adoption of artificial intelligence (AI) technologies, analysts said.
“The Philippine digital economy is forecast to sustain robust growth in 2025, with a projected expansion of 15% to 20%. Key drivers will include e-commerce, fintech, and digital infrastructure development, such as data centers and 5G connectivity,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said.
“E-commerce will continue its momentum as online retail becomes a staple for consumers, supported by the rollout of more affordable logistics solutions in rural areas. Fintech, particularly digital wallets and micro-lending platforms, will cater to the underbanked population. On the other hand, online education and remote work tools may see slower growth due to saturation in demand.”
The Philippine digital economy’s share in the country’s gross domestic product (GDP) went down to 8.4% in 2023 from 8.6% in 2022, data from the Philippine Statistics Authority showed.
In terms of gross value added, the digital sector grew by 7.7% to P2.05 trillion in 2023 from P1.9 trillion in 2022.
“As with the overall ASEAN (Association of Southeast Asian Nations) region, digital economy in the Philippines will experience steady growth this year, building on the strong momentum in past years, where internet adoption growth for the broader region was among the fastest in the world, and trends for e-commerce, online media and financial technology remain strong,” Joo-ok Lee, head of Regional Agenda, Asia-Pacific at the World Economic Forum (WEF), told BusinessWorld in an e-mail.
“We are hopeful that with positive impact of relevant trade pacts and regional harmonization efforts (such as the Digital Economy Framework Agreement or DEFA) currently being negotiated in ASEAN), this trend will only further accelerate. As ongoing uncertainty on the geo-economic horizon leads to relative stagnation of growth for trade in goods, services and digital economy will constitute a larger portion of global trade, with Philippines also contributing to that trend.”
The DEFA seeks to accelerate trade growth, create a safe online environment, enhance interoperability, and increase the participation of micro, small, and medium enterprises.
Mr. Lee added that the surge in online payments in the Philippines is expected to boost the digital sector’s contribution to the economy.
“In 2024, the Philippines witnessed a significant surge in digital payments and the trend is expected to continue, mainly due to increased adoption of e-wallets with platforms… Continued expansion of e-commerce services will also drive further digital payments as transaction between consumers and merchants will see significant increase,” he said.
AI, one of the most discussed topics during the WEF’s Annual Meeting in January, is also expected to benefit different industries’ digital transformation, he added.
“For the digital economy sector, AI can further fuel efficiency in services and accelerate job creation and upskilling. The Forum’s recently released Future of Jobs Report found that advancements in technologies, particularly AI and information processing (86%) and robotics and automation (58%) will be transformative and are expected to have the largest impact in terms of creation of new demand as well as displacement of jobs,” Mr. Lee said.
“While there are challenges on the horizon associated with rapid adoption of AI — such as risk of workforce displacement and ethical concerns — and therefore necessary guardrails and governance frameworks are critical, there is no doubt that integration of AI will also further accelerate the digital transformation of various sectors and add to the positive trajectory of digital economy development in the years to come.”
Philippine businesses, especially those in the e-commerce sector, will likely increase their use of AI this year, especially for predictive analytics, customer service chatbots, and personalization, Mr. Rivera said.
“Renewable energy-powered data centers and eco-conscious tech solutions will gain prominence. Beyond cryptocurrencies, blockchain adoption in supply chain transparency and decentralized finance may see pilot programs. Initiatives to connect underserved areas with affordable internet will expand, opening new markets,” he added.
Yves Gonzalez, Google Philippines public policy and government relations head, said midterm election spending is also expected to contribute to the growth of the digital economy as more candidates rely on online campaigns.
“The elections are expected to become a big contributor to the economy overall, particularly in the digital space… [With] campaign candidates basically investing to make videos, the creator ecosystem will definitely benefit,” Mr. Gonzalez said on the sidelines of an event this month.
The Philippine digital economy is expected to grow between $80 billion and $150 billion in gross merchandise value by 2030, according to a 2024 report by Google, Temasek Holdings and Bain & Co. — Beatriz Marie D. Cruz
