December 31, 2024 marked the Philippines’ deadline for employees of outlawed Chinese online gaming operators to leave the country or face penalties, including permanent blacklisting. The announced crackdown was perceived to be the end of Manila’s so-called pivot to China under the administration of former president Rodrigo Duterte. 

Critics of Duterte have tried to link heightened Chinese aggression in the West Philippine Sea to incumbent President Ferdinand Marcos Jr.’s ban on foreign gaming firms, called Philippine Offshore Gaming Operators (POGO) in the Philippines.

Marcos announced the ban amid public disapproval of POGOs because of the high number of undocumented Chinese workers in the Philippines and their activities. 

During Duterte’s administration, there were estimated to be about 100,000 to 150,000 Chinese workers in the Philippines, although the number was reduced by more than half by the latter half of Duterte’s term.

The Philippine Bureau of Immigration said there were 33,863 foreign POGO workers last year and 22,609 of the number left the country when Marcos announced the ban last July. That leaves around 11,000 foreign POGO workers still in the country.

Also, Marcos’ 2023 decision to withdraw from China’s Belt and Road Initiative (BRI) was perceived to be due to supposed attempts to link BRI projects to Philippine policy on the West Philippine Sea.

Marcos has not made any remark on the two claims, but his aides have explained that the government could find better terms for its key projects and that other measures could make up for the P20 billion (US$342.2 million) annual tax loss from the POGO shutdown.

Philippine economic managers reported that the economy would likely lose about 0.25 to one percent of gross domestic product (GDP) because of the POGO ban.

In November 2024, Economic Planning Secretary Arsenio Balisacan reported Manila’s GDP of 5.2 percent in the third quarter was lower than the six percent recorded in the same period last year.

Second fastest growth

Balisacan said the Philippines remained the second fastest growing Southeast Asian economy, despite geopolitical challenges.

The Philippines was behind Vietnam’s 7.4 percent economic growth, but ahead of Indonesia (4.9 percent), China (4.6 percent), and Singapore (4.1 percent).

DBS Bank also raised its forecast for the Philippines from 5.4 percent to 5.8 percent this year, the Singaporean bank said in its latest market focus report.

The International Monetary Fund (IMF) also upgraded its expectation that the Philippine economy would grow faster in 2025 and 2026 on the back of higher spending and slower inflation.

The IMF saw the Philippine GDP expanding 5.8 percent in 2024, 6.1 percent in 2025 and 6.3 percent in 2026 while inflation is seen at 3.2 percent in 2024, 2.8 percent in 2025 and 3.0 percent in 2026.

Economic driver

The Department of Tourism (DOT) also expected geopolitics to be a hurdle, particular as regards China, which sent almost 1.8 million Chinese tourists to the Philippines in 2019. 

Tourism Secretary Christina Frasco said DOT was expecting to miss the yearend target of 7.7 million tourist arrivals, because the tally was still at 5.6 million as of December 15, 2024.

Frasco clarified that the arrivals from China have not returned to the 2019 level, mainly because visa requirements were tightened amid fraudulent applications from POGO workers.

But she still regarded 2024 as an “exceptional” year with tourism receipts reaching an estimated PHP712 billion (US$13 billion) for the whole year, about PHP4.3 trillion (US$78.65 billion), or 17.9 percent of the GDP in 2023.

Frasco said the Philippines captured the largest share, 24.8 percent, of the total contribution of tourism to the GDP from the Association of South East Asian Nations, with at least 16.4 million Filipinos employed in tourism.

Tourist arrivals

Frasco said South Korea sent the most visitors with 1,505,251 arrivals in 2024, or 26.66 percent of the total.

South Korea has been a consistently source of tourists for the Philippines for decade, because of strong bilateral ties dating back to the Korean War. Korean pop culture also remains popular in the Philippines.

Ties are expected to improve further beginning in 2025, after a free trade agreement came into effect in December 31, 2024.

Next in tourist arrivals was the United States with 889,489 (15.75 percent), followed by Japan 367,747 (6.51 percent) China 306,549 (5.43 percent), and Australia 249,130 (4.41 percent). 

Canada was sixth with 210,986 (3.74 percent), Taiwan 203,428 (3.60 percent), Singapore 152,008 (2.69 percent), United Kingdom 150,550 (2.67 percent), and Malaysia 93,236 (1.65 percent).

While South Korea may have sent the most numbers of tourists to the Philippines, the United States brought in the most revenue, apparently because of the millions of U.S. residents claiming Filipino ethnicity.

Exports, imports

The United States also bought $11.4 billion worth of Philippine products (15.7 percent of total Philippine exports) in 2023. Next was China with $10.6 billion (14.6 percent), Japan $10.4 billion (14.3 percent), Hong Kong $8.8 billion (12 percent), and Singapore $3.52 billion (4.8 percent).

South Korea was sixth with $3.48 billion (4.8 percent), Netherlands $3.1 billion (4.2 percent), Thailand $2.9 billion (four percent), Taiwan $2.6 billion (3.6 percent) and Germany $2.5 billion (3.4 percent).

But in 2023, China continued to enjoy a significant trade surplus amounting to $20.3 billion. The Philippines has been importing the most from China since at least 2017.

But according to the United Nations Conference on Trade and Development (UNCTAD)’s Global Trade Update report, the Philippines was among five countries that have become less dependent on China in 2024.

The UN trade body said the Philippines’s trade dependence on China slid by 2.4 percent in 2024 compared 2023, the largest decline among the five countries that had reduced trade dependence on the economic giant.

Other countries with decreased trade dependence on China were South Korea, -1.1 percent; United Kingdom, -0.6 percent; Vietnam, -0.6 percent and the United States with -0.4 percent. 

UNCTAD said “there has been a significant shift towards more politically aligned trade relationships” since 2022. 

“This shift suggests that bilateral trade has increasingly favored countries with similar geopolitical positions, a trend often referred to as friend-shoring,” UNCTAD said.

Photo credit: iStock/ Kwun Kau Tam