Geo-Economics

What are the economic prospects of the Philippines for 2024?

A Brief

The Philippines is poised for robust economic growth, with its total GDP projected to double from USD 400 billion in 2022 to USD 800 billion by 2030. Forecasts indicate that by 2033, the country is set to join the select group of Asia-Pacific economies exceeding one trillion dollars, aligning with regional giants like China, Japan, India, South Korea, Australia, Taiwan, and Indonesia. This impressive expansion is not only expected to elevate the nation’s stature but also contribute to a significant rise in per capita GDP, surging from USD 3,500 in 2022 to an estimated USD 6,200 by 2030. Such economic vitality is anticipated to fuel growth in the Philippines’ domestic consumer market, attracting both foreign and domestic investments across various sectors.

An essential factor complementing this economic surge is the notable decline in the country’s inflation rate, reaching 4.1 percent in November 2023 from 8.7 percent at the beginning of the year, well within the projected range of 4.0 to 4.8 percent set by the Bangko Sentral Pilipinas (BSP). Fiscal indicators also underscore the Philippines’ sound financial management, with the fiscal deficit standing at 1 trillion Philippines pesos as of October 2023, marking an 8.5 percent reduction compared to the same period in the previous year. The National Government deficit-to-GDP ratio for the first three quarters of 2023 remained below the full-year target, reaching 5.7 percent against the 6.1 percent goal. Revenues have seen an impressive uptick, surpassing the target by 5.2 percent, with expectations set for revenues to reach 3.85 trillion Philippines pesos, equivalent to 15.7 percent of GDP in 2023. Notably, credit rating agencies S&P Global and Fitch Ratings affirmed the country’s BBB+ and BBB ratings with a Stable outlook in November 2023, reflecting confidence in its economic resilience. Additionally, the unemployment rate, averaging 4.6 percent for the first 10 months of the year, outperforms the same period in the previous year and aligns with the targets outlined in the Philippines Development Plan (PDP) 2023-2028, showcasing a positive trajectory for the Philippines’ economic landscape.

Philippines economic performance 2023

The Philippines has also shown a much-improved economic growth performance over the past decade, apart from during the peak period of the COVID-19 pandemic during 2020-21 when there was widespread global disruption to economic activity. During the period from 2012 to 2019, real GDP growth in the Philippines each year ranged between 6% to 7%. The economic rebound in 2022 pushed real economic growth to the highest pace recorded since 1976, with household final consumption expenditure growing by 8.3% year on year while gross capital formation grew by 16.8%. The recent economic data has continued to show expansionary conditions in the Philippines’ economy during the fourth quarter of 2023. The headline S&P Global Philippines Manufacturing PMI rose from 52.4 in October to 52.7 in November 2023, signaling continued expansionary operating conditions that were the strongest reading since February.

A trillion-dollar economic dream of the Philippines

The Philippines is expected to enjoy a continued growth spurt in the next decade with economic output hitting $1 trillion by 2033, buoyed largely by expanding private consumption. The Philippines may experience rapid economic growth in the next decade with gross domestic product (GDP) hitting $1 trillion or P51.1 trillion by 2033. This will allow the Philippines to join the ranks of China, Japan, India, South Korea, Australia, Taiwan, and Indonesia in the group of largest economies in Asia-Pacific. The nominal GDP of the Philippines as of 2021 was $379 billion or P19.387 trillion. The key growth driver is the rapid growth in private consumption spending, buoyed by strong growth in urban household incomes. The Philippines’s economy is also expected to drive per capita GDP from $3,300 to $6,500. The rise in per capita GDP will help underpin the growth of the domestic consumer market, catalyzing foreign and domestic investment into many sectors of the economy. This will help to drive foreign direct investment inflows into the Philippines, as multinationals build up their local presence in a wide range of 2033.

Opportunities for the Philippines in 2024

Positive GDP Projections

The recent economic data shows that the Philippines economy has continued to show robust expansion, with GDP growth of 5.9% year-over-year in the third quarter of 2023. The latest S&P Global Purchasing Managers Index survey results for November 2023 also showed that the Philippines’ manufacturing sector is one of the fastest growing among the major economies worldwide. Sustained remittance inflows from workers abroad, fast-growing IT, BPO sector exports, and the continued recovery of the tourism sector are also expected to support economic growth momentum during 2024. International visitor arrivals are estimated to have doubled in 2023 compared to 2022, driving a significant rebound in international tourism revenues.

The Philippines is amongst the world’s fastest-growing emerging markets

The Philippines economy has continued to show a strong recovery from the COVID-19 pandemic during 2023, with GDP growth strengthening to a pace of 5.9% in the third quarter of 2023

The Development Budget Coordination Committee (DBCC) narrowed the Philippines’ growth target to 6.5 to 7.5 percent for 2024, taking into account the risks posed by the possible global economic slowdown, El Niño, and other natural disasters, as well as geopolitical and trade tensions.

Growth in 2024 will be driven by private consumption as inflation is expected to return within the target range; falling oil prices; robust public spending; greater investments lured by the country’s sound macroeconomic fundamentals, investment-grade credit ratings, and the implementation of structural reforms; and increased demand for Philippines exports as supply chain bottlenecks ease.

BPO Sector: The Philippines is the BPO capital of the world

Total estimated BPO export revenues, consisting of computer and other business services, amounted to USD 21.3 billion for the first three quarters of 2023, 7.6 percent higher than the USD 19.8 billion total revenues registered in the same period in 2022. It can be noted that in 1992, the Philippines BPO industry was born, employing nearly a million workers, thus creating a ripple effect. In 2005 alone, it accounted for an average of 2.4% increase in the Philippines’ GDP. The succeeding year drew another milestone as the domestic economy grew by 5.4%. All these are due to the emerging BPO industry.

As years passed by, foreign investors moved into the Philippines. The Philippines Economic Zone Authority (PEZA) paved the way for lower area and tax requirements to start such a business.

In 2010, the country was named the BPO capital of the world–beating other countries such as India – one of the leading names in the industry. This can be attributed to the notion that Filipino BPO employees are good communicators and can easily capture the interest of customers from all over the globe. From medical transcription down to selling all other services, Filipino workers rake in monumental figures. There is nothing that a Filipino BPO worker will do to help his company prosper. His being value and purpose-driven is the vital element that makes the Philippines BPO industry boom.

The Philippines BPO industry contributes nearly $30 billion to the economy each year. It is estimated that 1.3 million Filipinos were employed in over 1000 BPO companies in 2019.

It is estimated that the country holds 10-15% of the global BPO market. Its services are oriented to its former colonial power, the USA, and also serve Europe and nearer neighbors, such as Japan, New Zealand, and Australia. The I.T. BPO industry plays a major role in the country’s economic growth. I.T and Business Process Association of the Philippines (IBPAP) reported that the market’s revenue grew by 10.3% to $32.5 billion in 2022, citing that the main drivers of this annual growth were healthcare, finance, tech, retail, and telecommunications.

Foreign Workers Remittances

The Philippines is projected to be the fourth top recipient of remittances this year, a report released by the World Bank said. The World Bank’s Migration and Development Brief, report said the top five recipient countries for remittances this year are India ($125 billion), Mexico ($67 billion), China ($50 billion), the Philippines ($40 billion), and Egypt ($24 billion).

Tourism Sector Growth

The tourism industry is a known key contributor to the Philippines economy. The Bangko Sentral Philippines recognizes this sector as one of the biggest contributors to local employment. Last year, the Department of Tourism (DOT) reported that international tourism arrivals rose to 2.6 million in 2022, surpassing its full-year target of 1.7 million arrivals. This also translated to a 2,465-percent jump in government revenues at 208.96 billion Philippines pesos. The United States remained the top tourist market, followed by South Korea, Australia, Canada, the United Kingdom, Japan, Singapore, India, Malaysia, and China. Meanwhile, more than 628,000 were returning Filipinos.

Albeit still lower than the 8 million level before the pandemic, the jump in figures speaks good news to the economy. As a country heavily relies on tourism, the surge in the number of arrivals will be a blessing to employment and revenue generation for the country.

Just last month, the president approved a proposal to refund taxes for foreign travelers and roll out electronic visas highly prioritizing the Chinese and Indian markets, both to boost foreign tourist arrivals. He also removed the One Health Pass entry requirement for travelers as well as the mandatory inclusion of travel tax on booking airfares to lessen the hassle of queueing up at travel tax booths inside airport facilities. The tourism industry is noticeably up for a boost, but the biggest challenge now hinges on how we can compete with our global peers to lure more tourist arrivals.

Improved Positive ratings

Economic expansion remained broad-based as all major production sectors posted positive year-on-year growths in the first three quarters of the year, led by services (7.0 percent), industry (3.7 percent), and agriculture (1.1 percent). Multilateral organizations recognize the strong economic performance of the Philippines and expect the country’s expansion to be one of the fastest among its regional peers in 2023 with the Asian Development Bank (ADB) forecasting a growth of 5.7 percent, the ASEAN+3 Macroeconomic Research Office (AMRO) and World Bank (WB) at 5.6 percent, and the International Monetary Fund (IMF) at 5.3 percent. Meanwhile, the Philippines’ external performance remains strong with gross international reserves (GIR) increasing to $102.7 billion as of the end of November 2023, from $101 billion at the end of October.

The peso-dollar exchange rate settled at 55.38 pesos per US dollar on December 27, 2023, averaging 55.63 Philippines pesos year-to-date (YTD). This remains within the peso-dollar exchange rate assumption for 2023, which is PHP 55.50 to 56.00 per US dollar. In addition, total cash remittances from Overseas Filipinos (OFs) also continue to increase. On a YTD basis, cash remittances coursed through banks in the first 10 months of 2023 amounted to USD 27.5 billion, up by 2.8 percent from USD 26.7 billion recorded in the same period a year ago.

Navigating Challenges for the Philippines in 2024

Geopolitical uncertainty

The Philippines and Indo-Pacific states are confronted by geopolitical challenges that range from traditional, non-traditional, and evolving security threats. The collective concern to manage these security challenges pushes states to cooperate in multilateral, multilateral, and bilateral approaches.

The administration of President Ferdinand Marcos Jr. is expected to maximize the country’s diplomatic relations while remaining independent and free from external pressure in the exercise of its foreign and security policies. This is tested in the latest diplomatic engagements of the administration. Recognizing the limitations in the country’s resources, he also advised that the Philippines must work with the United States, Australia, and other security partners to implement a maritime security strategy. He said that this would convey a message of solidarity.

Weak Governance indicators

The Philippines has an ESG Relevance Score of ‘5’ for Political Stability and Rights as well as for the Rule of Law, Institutional and Regulatory Quality, and Control of Corruption, as is the case for all sovereigns.

Infrastructure Back lags

Infrastructure, by definition, undergirds a country’s socioeconomic development. The more strategically distributed it is – both sectoral and spatially – the better it is for inclusive growth and sustainable development. With a growing economy, the Philippines requires more and better-selected infrastructure investments, given its archipelagic landscape, expanding population, and rapid urbanization. To support a higher growth trajectory and improve the quality of life in both urban and rural communities, infrastructure development will remain among the top priorities of the government over the medium term. Spending on infrastructure has to be intensified while addressing persistent issues and challenges hampering implementation so that the so-called “Golden Age of Infrastructure” will form part of a solid foundation for reaching the country’s Long-Term Vision in 2040.

Demographic dividends viz a viz challenges

The Philippines economy is poised to undergo accelerated growth as a result of demographic dividends as early as 2025 if it can moderate population growth and invest in human capital. The National Economic and Development Authority (NEDA) cited the Philippines Development Plan (PDP) 2017-2022 emphasizing the need for a sustained universal healthcare program and reproductive health policies to reduce mortality and fertility rates.

The Philippines is expected to be the last major Asian economy to benefit from the demographic dividend between the years 2025 and 2070. If not properly addressed, the country would need to wait until at least 2050 to benefit from the demographic dividend, or possibly miss it altogether.

Low Industrial outputs

During March 2023, Philippines manufacturing continued its growth trajectory, albeit at a slower pace compared to the previous year and month. The value of production index (VaPI), an indicator of factory output, recorded a 4.9 percent year-on-year (YoY) growth rate in March, as per the Philippines Statistics Authority (PSA).

The VaPI figure for March, though positive, represents a slowdown from the 9 percent expansion in February and a staggering 370.3 percent growth rate observed in March 2022, according to a report by a news agency. Similarly, the volume of production index (VoPI) saw a 2.2 percent increase, less robust compared to the 5.2 percent growth in February and 346.2 percent in March 2022.

What the Philippines must do?

The Philippines must manage its youth bulge

The Philippines today has the largest generation of young people in its history. 30 million young people between the ages of 10-24 account for 28 percent of the Philippines population. Developing policies and investments for the future of young people could lead the Philippines to reap the benefits of a ‘demographic dividend’ – the economic growth potential that can result from households having fewer children and a larger number of young people who now have better health, better education, and decent jobs who can save and invest for their future.

Invest and harness its tourism sector

The tourism sector is a key contributor to the resilience of the Philippines’ external payments position and overall economic development, alongside overseas Filipino (OF) remittances and business process outsourcing. As one of the country’s biggest employers, it provides various opportunities for businesses and individuals from all segments of society and supports sustained structural foreign exchange (FX) inflows. But given the contact-intensive nature of the tourism sector, it has been significantly hit by the COVID-19 pandemic. Nonetheless, prospects for recovery in travel services are improving amid the waning of the pandemic and easing of travel restrictions. Travel services are one of the main sources of FX inflows in the country’s balance of payments (BOP). It accounts for about 20 percent of total services exports reflecting an average of 15 percent sustained growth over the past decade (from 2010 to 2019, pre-pandemic).

Infrastructure investments

The Philippines is one of the fastest-growing economies in Asia and is the second fastest-growing economy in the Association of Southeast Asian Nations (ASEAN). Increasing urbanization, a growing middle class, and a young, English-speaking population continue to drive the local economy, thanks to strong consumer demand supported by a burgeoning labor market and steady remittances from overseas Filipinos.

Of the 3,770 infrastructure projects in the Philippines with an indicative total investment requirement of CAD 432.5 billion over the medium term, 194 projects are listed as high-impact Infrastructure Flagship Projects (IFPs). These projects are aimed to spur and accelerate economic growth across the Philippines archipelago as spearheaded by the economic team of the current administration.

Filipino President Ferdinand Marcos Jr., has been actively advocating for public-private partnerships (P3s) as a favorable financing model for infrastructure projects.

Defense and Security enhancement

Recognizing the paramount importance of safeguarding its national security, the Philippines has embarked on a 15-year modernization program, Horizon 3 (H3), to fortify its defense capabilities amid evolving geopolitical dynamics.

Also, in light of the escalating challenges posed by a resurgent and assertive China, the strategic alliance with the United States emerges as a linchpin in the Philippines’ defense strategy.

The enduring U.S.-Philippines relationship, rooted in shared democratic values and historical ties, is exemplified by the designation of the Philippines as a ‘Major non-NATO Ally’ (MNNA). This alliance, the oldest in Asia, presents a strategic opportunity for the Philippines to bolster its self-defense capabilities through collaboration with U.S. defense and security equipment manufacturers. With an average annual contribution exceeding $120 million in Foreign Military Financing (FMF), the United States has expressed a heightened commitment, allocating over $200 million this year due to regional security concerns, and an additional $100 million for the armed forces’ modernization programs.

Against the backdrop of maritime disputes with China in the West Philippines Sea, the Department of National Defense (DND) underscores the critical role of air power in territorial defense. Aligning with current technological trends, the enhancement of the Philippines Air Forces’ capabilities is pivotal. The incorporation of unmanned aerial systems, artificial intelligence, and space capabilities becomes imperative in this pursuit. As the Philippines seeks to maintain regional stability, the DND, a key player in the Indo-Pacific region, emphasizes the significance of bolstering capabilities under Horizon 3. The focus on C4ISTAR, air defense systems, air and surface interdiction systems, anti-tank systems, and ground rocket systems underscores the commitment to a modernized defense apparatus, pending approval by the DND. In the face of a dynamic geopolitical landscape, the symbiotic U.S.-Philippines partnership stands as a cornerstone, offering crucial support for the Philippines’ defense endeavors.

Analysis

How China energy demands are soaring?

The rise in energy demand has been a defining feature of industrialization, beginning with Britain in the late 18th century, where the emergence of factories powered by steam engines led to a dramatic surge in coal consumption. This transition from agrarian economies to industrial powerhouses not only spurred manufacturing growth but also significantly increased urban populations, as coal facilitated industries like textiles and metallurgy and fueled transportation advancements, notably railways.

Following Britain, countries like Germany and France in Europe adopted similar energy-intensive practices, incorporating electricity to further enhance productivity. In the United States, the late 19th and early 20th centuries saw rapid industrialization, driven by the expansion of railroads and the automobile industry, which created new energy needs primarily met by coal and oil, while electricity revolutionized industry and domestic life. Today, China’s transformation from an agrarian society to the “world’s factory” marks a new chapter in this narrative, characterized by unprecedented industrial growth and an extraordinary demand for energy resources, particularly coal. Yet, Chinese energy appetite is growing at an unprecedented level, making it many times larger than those of western Industrial giants.

While China itself possesses vast resources, the country’s foremost status as the largest consumer in the world is as a result of rapid industrialization, urbanization and an ever-growing demand for technological advancement. China has continued to face the pressure of energy demand through manufacturing, infrastructure, and an attempt to control the technological sector. As China turns its focus to AI, EVs, and smart manufacturing, its insatiable appetite for resources – be it, fossil or renewable – is reshaping energy demand, markets and supplies, and geopolitics in unprecedented ways.

Table of Contents

Overview of China’s economic growth and Industrialization

The growth and transformation of China’s economy are subtle but powerful.

—Francisco Betti

Over the past four decades, because of economic reforms, China’s economy is growing at an unprecedented rate of more than 9 percent, and this has lifted more than 800 million Chinese citizens out of poverty. Energy demand in China has remarkably reached higher levels, since the Chinese Economy has expanded at a very high rate.

The export-oriented growth model of the country that was mainly led by investments and exports is shifting towards the consumption and services sector. China’s Gross Domestic Product expanded by 5% year on year in the first half of 2024 but the quarterly growth rate has calmed down from 5.3% in the first quarter to 4.7% in the second half indicating the need for stronger policy support to achieve the set year’s targets. While extreme poverty was eliminated by 2020, still, 17.2% of the population lives on under $6.85 a day.

Global energy consumption trends are being dictated by Asia’s energy consumption titan “China”, owing to its mammoth size. China overtook Europe in per capita energy consumption in 2023 backed up by more renewable capacity alongside coal fired power. Having been the world’s factory, China’s energy consumption requirements are escalating. The Dragon economy has displayed consistent growth in renewable power, especially renewable electricity, with freshly installed renewable energy capacity of 1.59 billion kilowatts early in 2024. Still, it needs investment in infrastructure, smart grid, and energy transition to support its economic growth, maintaining energy security and sustainability.

Factors Contributing to Rising Energy Demands

The foremost factor driving energy demand is the industry, for instance, the sector has experienced substantial growth in 2024, with the added value of major industries rising by 6% in the first half of the year. The high-tech industry, in particular, saw an impressive 8.7% growth rate. This industrial expansion has been accompanied by increased energy demands, driven primarily by urbanization. China’s cities now consume more energy than its industrial sector due to the rising living standards of a growing middle class and large-scale migration to urban areas. It is predicted that for every 1% increase in urbanization, the country’s energy consumption will rise by at least 60 million tons of coal.

The urbanization rate in China has soared from 17.92% in 1978 to 66.16% in 2023, and this movement is expected to continue, with the government aiming to create over 12 million jobs in metropolitan areas by 2024. As urbanization increases, so does energy consumption, as city households consume 50% more energy than rural ones. By 2025, China’s power consumption is anticipated to reach 10,498 TWh, compared to 4,475 TWh in the United States.

China is also focusing on technological advancements and renewable energy to meet its growing energy needs. Investments in 5G networks, artificial intelligence, and renewable energy sources such as wind and solar reflect the country’s commitment to modernizing its industrial and energy infrastructure. The “Made in China 2025” campaign highlights China’s ambition to become a global technological leader. However, balancing energy demand with sustainable consumption remains a complex task, as the adoption of advanced technologies and rapid urbanization continues to fuel the nation’s rising energy requirements.

Energy Mix of the Dragon

The main sources of energy in China’s energy mix are still coal, oil, and natural gas. China relies heavily on these resources. By mid-2024, China accounted for 54% of the world’s coal-fired power capacity, with 1,147 GW in operation. Even the number of new coal power approvals has slowed down recently—just 12 new projects were approved in the first quarter of 2024—coal still plays a mammoth role in the energy mix. Globally, China helped install 67% of the coal-fired capacity that was being commissioned in 2023.

Where China imports its fossil fuels from?

As Gas imports are concerned, China is the world’s largest importer of natural gas, bringing in both pipeline gas and liquefied natural gas (LNG) to meet its growing energy demands. Russia, the Power of Siberia 1 pipeline remained one of the main suppliers of natural gas to China. This pipeline supplied nearly 38 billion cubic meters of natural gas in 2024. Turkmenistan is also a key contributor of approximately 33 billion cubic meters. Uzbekistan and Kazakhstan also contributed significantly.

The country is also a major importer of LNG, and the largest supplier, Australia supplied nearly 24 million mt of LNG by 2024. Qatar’s LNG exports amounted to 25 million mt in 2024 to China. United States 12 million tons. Malaysia and Indonesia jointly exported around 15 million mt of LNG to the Chinese market.

Despite having abundant coal resources, the country heavily relies on imported coal. China’s major supplier of coal is Indonesia; all through the year 2024, importers bought about 130 million tons of coal. Russia supplied about 70 million tons and Australia about 55 million tonnes of coal. Mongolia supplied about 30 million tons.

Renewable Energy

China has installed 1,180 GW of solar and wind power by early 2024, more than coal’s 1,146 GW for the first time. Compared to previous years, China added almost twice as much utility-scale solar and wind capacity in 2023. Between 2023 and 2028, the nation is anticipated to contribute 56% of the additional renewable capacity globally. This expansion is facilitated by government regulations and investments, which include notable developments in the production of wind turbines and solar photovoltaic (PV) systems. China’s rapid deployment of renewable technologies reflects its commitment to achieving net-zero emissions by 2060, although the country will need to manage the ongoing role of coal and other fossil fuels in its energy usage.

Challenges and Implications

China’s rapid industrialization and heavy reliance on coal have led to severe environmental challenges, including widespread air pollution and significant greenhouse gas emissions. While the country is a global leader in renewable energy expansion, particularly in wind and solar capacity, its dependence on coal hampers progress in environmental protection. Despite incorporating more renewable energy sources, the nation faces issues like system congestion and curtailment, with solar power curtailment exceeding 5% in March 2024, highlighting the challenges in managing the surge in renewable energy and effectively integrating it into national power grid.

Likewise, if we look outside of China, the situation depicts China’s vulnerability on imported energy and its continuous reliance on the littoral states from where the imports are being made. For instance, the South China Sea dilemma is one such bad dream, which haunts China and it desperately wants to get complete control of the maritime routes either by hook or by crook. This region is significant for Chinese energy imports, as over 80% of China’s imported oil is shipped through the South China Sea region and dominance of these sea lanes is crucial for PRC’s energy policy.

As a result, China has intensified its naval patrols in the area to protect its sea communications from disruptions due to ownership of the economic zones or presence of foreign navies. One of them concerns the creation of Ultra High Voltage (UHV) transmission lines to interconnect renewable energy centers, wind and solar in western China with densely populated areas in the eastern part of the country. Furthermore, China is gradually expanding on the demand for coal fired power because risks on access to the energy mix from suppliers may be disrupted by tensions in the South China Sea and competition with other main energy consumers like the U.S., Japan and India.

Future Outlook

Significant changes in China’s energy sector are anticipated over the next few years, with electricity generation projected to increase at a rate of 3.33% annually from 2024 to 2029. This growth is primarily driven by the rapid development of renewable energy sources, particularly wind and solar power, as well as the increasing energy demands of the nation.

By the end of 2024, China is expected to add 1,200 GW of wind and solar capacity, surpassing earlier projections and achieving ambitious targets ahead of schedule. This expansion is part of China’s overarching plan to enhance its total renewable power generation capacity by over 300%—or 3.9 TW—from 2022 to 2030. However, despite these advancements, coal power continues to play a significant role in China’s energy mix, as new coal projects are still being pursued to manage the intermittency associated with renewable energy sources.

Plans are underway to integrate a unified national power market by 2030 to improve the efficiency of renewable resource utilization and mitigate fluctuations in energy supply and demand. To fully harness renewable energy resources, advancements in storage technologies and improvements in the power distribution network are necessary, including the deployment of Ultra High Voltage (UHV) transmission technology to connect renewable energy sources with demand centres across the country.

End Note

China’s energy landscape is shaped by rapid economic growth, urbanization, and industrial demand. Despite significant investments in renewable energy like solar and wind, coal remains a major part of the energy mix due to its role in ensuring energy security. China intends to significantly increase its use of renewable energy by 2030 and is on target to surpass 1,200 GW of wind and solar capacity by the end of 2024.

Reducing reliance on coal and integrating these renewables into the grid are still major obstacles, though. Addressing these issues is crucial for China’s sustainable growth and its impact on the global energy market. Effective management of this transition will be essential for achieving environmental goals and maintaining economic stability.

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Analysis

Is Japan living in the Future?

From the land of the samurai to the forefront of innovation, Japan’s journey is nothing short of remarkable. After WWII devastation, Japan not only rebuilt—it redefined the future. In the 1980s, they gave us the Walkman, revolutionizing personal tech, and the Shinkansen, the first bullet train, forever changing travel; but that was just the beginning. Today, Japan leads the world in robotics, smart cities, and even space exploration. Picture specialized robots that care for the elderly, cutting edge vending machines that predict your cravings, and magnetic levitating trains that hover on air.

Japan is living in the future through innovations that feel straight out of science fiction. Cities like Fujisawa are designed as smart ecosystems, where energy, transportation, and homes are connected and run by the network of artificial intelligence. From smart cities to space exploration, Japan isn’t just dreaming of the future—it’s already living it. Let’s have a glimpse of the future by pondering the question, “Is Japan really living in the Future?”

Table of Contents

AI Integration: Powering Daily Life with Artificial Intelligence

Hold on to your sushi rolls, because Artificial Intelligence isn’t just a distant dream in Japan; it’s a thriving reality. With a predicted 920,000 AI-related jobs by 2030, 52% of Japanese enterprises currently riding the AI wave, and a $4.9 billion market target, Japan is rapidly becoming the Silicon Valley of the East.

From robots to research institutes, Japan’s AI scene is thriving, with firms garnering over $1 billion in funding in 2020 alone. The country is setting its sights on a massive AI market and wants to train a tiny army of AI engineers by 2025. Japan produces roughly 45% of the world’s industrial robots, which drive efficiency in industries ranging from manufacturing to healthcare. For instance, PARO, a therapy robot, is utilized in more than 30 countries to help dementia patients.

Japan also leads in AI development, with corporations such as SoftBank and Sony. The advent of automated convenience stores, such as FamilyMart’s AI-powered stores, eliminates the need for human employees, while smart toilets outfitted with health sensors and built-in AI health diagnostics are becoming more ubiquitous in homes and public places. The Japanese government’s “Society 5.0” effort embodies the country’s goal for an AI-powered future in which technology solves societal problems. Japan has invested more than $20 billion in AI and robotics innovation, establishing itself as a global leader in automation, digital healthcare, and smart city development.

Japan is paving the way for a tech-driven future, with AI-powered cars, maglev trains reaching speeds of over 600 kilometers per hour, and smart home systems becoming the standard.

Efficient Infrastructure

Japan’s reputation extends beyond its rich culture to its remarkable infrastructure. With a population of 123.3 million in a compact area, Japan’s transport system is a model of efficiency. The Shinkansen (bullet train) is renowned for its speed and punctuality, reaching up to 320 kilometers per hour and covering major routes like the 370 kilometers route between Tokyo and Sendai in just 1 hour and 33 minutes. Adding to this, futuristic maglev trains can zoom at over 600 km/h, showcasing Japan’s cutting-edge transport technology.

Tokyo’s extensive network includes 882 train stations, with 282 subway stations ensuring eco-friendly, efficient travel. Japan’s airports, such as Haneda and Kansai, manage millions of travelers seamlessly. As an island nation, Japan excels in both shipping and air freight, supported by 5,000 ports and a significant merchant fleet, making it a global leader in commerce. The country’s infrastructure includes 1,218,800 kilometers of highways and 27,000 kilometers of railways, excellent for robust connectivity.

Unique Lifestyle and Culture

Japan’s cities are a stunning fusion of tradition and modernity. In Tokyo, futuristic skyscrapers like the Tokyo Skytree rise 634 meters above ancient temples such as Senso-ji, creating a mesmerizing urban landscape. This blend of old and new is not just visual but experiential. Japan is a leader in integrating high-tech gadgets into daily life. Wearable translation devices, such as Pocketalk, can translate 74 languages in real-time, making communication effortless for travelers.

Holographic displays are becoming more common in places like Shibuya, offering interactive experiences in shopping and entertainment. The nation’s innovation extends to its cultural practices. For instance, the Ghibli Museum in Mitaka features interactive exhibits that blend technology with traditional storytelling, captivating millions of visitors. Japanese cities also showcase cutting-edge robotic technology in everyday life, from humanoid receptionists at hotels to robotic baristas in cafes.

“The Japanese way of working is characterized by a relentless pursuit of perfection and a deep respect for discipline and detail.”

(Kenichi Ohmae)

In July 2024, Japan unveiled a new series of banknotes featuring cutting-edge anti-counterfeiting technology, including three-dimensional holographic stripes and tactile markers for the visually impaired. This update to the ¥10,000, ¥5,000, and ¥1,000 notes reflects Japan’s commitment to blending advanced technology with its rich cultural heritage.

Japanese culture is also marked by discipline and social responsibility, as seen in the “Osouji” custom, where people rigorously clean public spaces, such as stadiums, after events. Additionally, Japan’s education system emphasizes innovative teaching and STEM subjects, highlighting its focus on cultivating a forward-thinking society.

Work Ethic and Social Values

Japan’s work ethic is renowned for its emphasis on efficiency, discipline, and continuous improvement. The concept of “kaizen” which means “continuous improvement”, is embedded in every aspect of Japanese business and culture.

Taiichi Ohno, a pioneer of the Toyota Production System, said: “Without standards, there can be no improvement.”

Companies like Toyota have perfected this philosophy, leading to a 25% increase in productivity over the past decade by refining processes and fostering innovation. This relentless drive for progress is also reflected in Japan’s high employee retention rates and the culture of lifetime employment that remains influential, despite changing global trends. Respect for nature is deeply ingrained in Japanese values, visible in meticulously maintained traditional gardens and the integration of eco-friendly practices in daily life.

,“The ultimate goal of farming is not the growing of crops, but the cultivation and perfection of human beings.”

(Masanobu Fukuoka)

For example, Tokyo’s Eco Tokyo initiative aims to reduce greenhouse gas emissions by 30% by 2030. Additionally, Japan leads in recycling, with a 90% recycling rate for plastic bottles, thanks to rigorous sorting and community participation.

End point

In essence, Japan’s blend of advanced technology, efficient systems, unique lifestyle, and cultural values not only highlights its remarkable progress but also sets it apart as a nation truly living ahead of its time. With a relentless pursuit of innovation, from the world-renowned Shinkansen to cutting-edge banknotes, and a deep respect for tradition and sustainability, Japan integrates the past with the future. Japan’s ability to harmonize these elements ensures it remains at the forefront of the future, demonstrating how a nation can balance technological advancement with enduring cultural heritage.

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Analysis

How does it feel like living in the Philippines as an American Expat?

For Americans, relocating to the Philippines may be like stepping into a colorful tapestry where East and West collide in the most surprising manner. Imagine yourself in a busy metropolis, where modern malls are just a short distance away and street sellers are selling delicious street cuisine. You travel across verdant islands with glistening waters, but you also have to become used to a new way of life and set of cultural customs. There are always fresh adventures and a few surprises to look forward to every day in this special blend of difficulty and excitement. Living in the Philippines is an exciting and enlightening experience, ranging from acclimating to local customs to enjoying great, yet foreign dishes. Ready to dive into this captivating journey? Let’s explore!

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Living in the Philippines as an American

Living in the Philippines as an American is an intriguing experience that brings together two opposing worlds. On one side, there’s the allure of sunny beaches, vibrant festivals, and a strong sense of community. On the other hand, there is the issue of adapting to new cultural norms, local languages, and lifestyles. It’s a location where American ideas combine effortlessly with Filipino customs, resulting in a setting that is both familiar and pleasantly unique. Whether it’s the people’s kindness, the vibrant food scene, or the slower pace of life, living in the Philippines provides a distinct blend of comfort and adventure that can be both eye-opening and profoundly satisfying.

You can never be bored in the Philippines thanks to its beaches and many islands, which is one of the main draws for Americans. Currently, over 35,000 Americans reside in the Philippines, accounting for 1.3% of all Americans living overseas.

This Southeast Asian jewel has beautiful tropical beaches, low-cost living, and a laid-back lifestyle that appeals to people seeking both adventure and relaxation. From bustling urban hubs like Manila and Cebu to the tranquil charm of its islands, the country offers a unique experience. Its English-speaking populace, thriving expat communities, and strong Western influences make it particularly desirable to Americans looking for long-term vacation.

Cultural Experience and Hospitality

One of the Philippines’ biggest strengths is its well-known hospitality, as evidenced by its ranking as the first country in Asia and in the Top 8 countries in the world. Over the years, the nation has gained a reputation for showing true hospitality to tourists, immigrants, and expats. The intense heat on the streets may not dampen the friendly grins and cordial greetings that Filipinos always bestow upon you.

An American’s Perspective On Filipino Hospitality

When asked about his experience in the Philippines, an American replied, “Honestly, Filipinos are some of the most generous and welcoming people I’ve ever met. When I married my wife, I didn’t just marry her immediate family of five—I became part of this massive extended family with dozens of aunts, uncles, cousins… the whole package. It’s almost like marrying into an entire country of over 100 million people. And Filipino hospitality, it’s not just about giving you a warm welcome; it’s like they’re making you part of their family. In the Philippines, guests are treated like royalty. They’ll go all out, preparing these huge meals, even if they can’t really afford it. What’s amazing is, this doesn’t stop when they leave the country. It’s like they carry that sense of hospitality with them wherever they go. You’ll always hear ‘Kain na’—which means ‘Let’s eat’—or ‘Kumain ka na ba?’—‘Have you eaten yet?’—and it just makes you feel instantly at home.”

Another visitor stated, “Coming from an Italian family, I thought I knew a thing or two about hospitality. But Filipinos? They take it to the next level. Their parties are overflowing with food, and when you leave, you’re not just full—they send you home with enough leftovers to feed an army! But it’s more than just the food—it’s that deep sense of belonging they give you. They welcome you with open arms, excited to share their culture, and it feels like you’re one of their own. I’ll admit, sometimes it can be overwhelming—especially when privacy is scarce and the celebrations never seem to end. But at the end of the day, you come back appreciating their warmth and acceptance even more. Filipino hospitality is all about making everyone feel like family, no matter where you’re from.”

How Filipinos Welcome with open Hearts

Filipinos are a remarkable, known for their resilience, strong family ties, and ability to smile even in the face of hardships. What truly makes them stand out, however, is their unique brand of hospitality. Whether dealing with locals or foreigners, Filipinos have a natural warmth that makes everyone feel like family. This trait has been ingrained in their culture for centuries, with early ancestors welcoming traders and foreigners with open arms long before colonization. Even today, this welcoming spirit is alive and well, creating a lasting impression on those who experience it.

Filipino hospitality isn’t just about politeness—it’s an act of genuine care. From offering slippers and food to ensuring a guest’s comfort, Filipinos go out of their way to make people feel at home. It’s a gesture that reflects their deep-rooted values of generosity and compassion. Even if they have little to give, they will still find a way to share whatever they have. This is true even among the poorest, who would gladly offer their last bowl of rice to make a guest feel welcome.

Beyond generosity, Filipino hospitality is about forming meaningful connections. When you are welcomed into a Filipino home, you aren’t just a guest—you become part of the family. Filipinos treat their visitors with the same love and care they offer their own relatives, leaving a lasting impression that goes far beyond the visit itself. This sense of belonging is what makes Filipino hospitality so memorable and cherished by people from all over the world.

Even in a fast-changing, modern world, Filipino hospitality remains a vital part of the culture. It’s more than just tradition; it’s a reflection of the Filipino spirit—one that values kindness, inclusion, and the importance of making others feel at home. This enduring trait is something Filipinos are rightfully proud of and continue to pass on to future generations.

Some short facts about the Philippines

First, here are some essential things you should know about the Philippines:

Capital: Manila

Main languages: Filipino and English

Population: around 119 million (119,106,224)

Currency: Philippine Peso (PHP)

Government type: democratic and presidential representative federal republic

Religion: Christianity

Visas and Legal Considerations

U.S. citizens can relocate to the Philippines for various reasons, including work, education, retirement, business, or to join family members. While U.S. citizens can enter the Philippines visa-free for up to 30 days as tourists, longer stays require specific visas. It’s important to choose the appropriate visa based on your situation, especially if you plan to work. Those looking to work need a 9(g) Work Visa, which costs around $400 and requires proof of employment and a provisional work permit. Other visa options are available depending on the purpose of your move, such as for retirement or education.

For retirees, the Special Resident Retiree’s Visa (SRRV) is available for individuals over the age of 35 who are in good health. This visa comes with financial requirements, such as maintaining a $20,000 deposit or investing in real estate, and the application fee is $1,400, with a $360 annual renewal fee. Students can apply for the 9(f) Student Visa if they’ve been accepted into a recognized educational institution in the Philippines, with an application fee of $250. Those who are married to Filipino citizens can apply for a spouse visa, allowing for a longer stay.

The visa application process is fairly simple and requires submitting essential documents such as a valid U.S. passport, medical and physical examination reports, police clearance, visa fees, and four passport-sized photos.

Cost of Living as an American Expat

Moving to the Philippines offers a more affordable cost of living compared to the U.S. Everyday expenses are significantly lower. For example, a three-course meal for two people costs about $21.52 in the Philippines, compared to $75 in the U.S. A loaf of bread is $1.19 compared to $3.54, and a 0.5-liter domestic beer is just $1.26 versus $6. Public transport is also far cheaper, with a monthly pass costing $10.14 compared to $70. Basic utilities cost around $100.15 monthly in the Philippines, while in the U.S., they average $188.70. Rent for a 1-bedroom apartment in a city center is about $324.40 in the Philippines, much lower than the $1,708.27 average in the U.S., and purchasing property is also more affordable at $2,616.76 per square meter compared to $4,692.35.

Prices will vary greatly depending on where you move. Living in the city center is likely to be more expensive than in a rural area. The Philippines has a 52% lower average cost of living than the US, which is beneficial to consider. As shown in the table above, property is also far less expensive.

Cost of migrating to the Philippines

Before you can focus on daily living expenses in the Philippines, it’s important to account for the cost of transportation, especially when relocating from abroad. This includes shipping your household goods and covering airfare for family members. If you’re bringing pets, additional arrangements will need to be made for their transport as well. On average, shipping a full container from the U.S. to the Philippines ranges between $850 and $4,500, depending on the size and location. While shipping by sea is generally cheaper, it also takes longer than air freight. The exact cost will depend on the volume of your belongings and your departure and arrival points, so obtaining quotes from shipping companies is crucial to planning your move.

Once you’re in the Philippines, securing housing becomes a priority. Many expats choose to rent initially, as it offers flexibility to explore different areas before settling down. Both rent and property prices in the Philippines are substantially lower than in the U.S., making it more affordable to rent or buy a home. Healthcare is another vital aspect to consider; while the public healthcare system is underfunded and ranks low internationally, private healthcare offers a higher quality of care. Most expats opt for private health insurance to ensure access to better medical services. In terms of daily life, banking is relatively straightforward, though opening a local bank account typically requires an in-person visit. Public transportation is affordable, but systems like jeepneys and buses can be unpredictable, so learning to navigate them efficiently is key to easing your transition.

Challenges

Living in the Philippines comes with its own set of challenges, particularly in major cities like Manila. One of the biggest issues is the heavy traffic, which can make commuting long and unpredictable. The congestion, combined with variable road conditions, can make driving stressful, so many expats rely on public transport or hire drivers to navigate the city more efficiently.

Another common challenge expats face is the so-called “skin tax,” where foreigners may be charged higher prices for goods and services simply because they’re perceived to have more wealth. This can apply in markets, transportation, and even housing, so it’s important to be aware and, when possible, negotiate prices or seek recommendations from locals to avoid overpaying.

Addressing Unexpected Import Duties and Customs Challenges in the Philippines

Hello, I am British and for the past few years I have been regularly sending boxes to my Filipino daughter in law, I am sending stuff like clothes and toys and books for my grandchildren. She was never required to pay import duty before now. The last 3 boxes I sent her with similar contents to all the previous boxes, she had to pay a total of 27,000 pesos import duty. I want to see a breakdown of the import duty but she is never given or sent any paperwork just told to pay the delivery driver.Anyone got advice on dealing with Philippines Customs import duties.RegardsRon

Expats in the Philippines often encounter unexpected import duties and customs challenges, which can lead to confusion and frustration. For instance, many expats sending personal items like clothing, toys, and books may find that, despite prior shipments being duty-free, recent boxes are subjected to significant import fees. This can be particularly distressing when customs charges appear without clear explanation or official documentation. Typically, recipients are required to pay duties directly to delivery drivers without receiving a detailed breakdown of the fees. This lack of transparency makes it difficult to understand or dispute the charges.

What Living in the Philippines Was Like: An Expat’s Perspective

I first traveled to the Philippines in 2015 for a solar project in Northern Samar, and was instantly charmed by the local culture and people. My initial visit evolved into a long-term adventure as I organized a yoga retreat in Mindoro and decided to live abroad indefinitely. Although I had an offer to teach yoga in Bali, I opted for a 6-week position on Siargao Island, which unexpectedly became a five-year stay until the Covid-19 pandemic altered travel plans.

Siargao, now bustling compared to when I arrived, remains a unique gem with its vibrant community and the warm hospitality of the locals. Navigating visa requirements in the Philippines is notably simpler than in many neighboring countries, like Indonesia, which is a plus for long-term stays. Connectivity on Siargao has improved but still varies, so remote workers should verify that it meets their needs. While the Filipino diet heavily features meat, and sourcing fresh vegetables can be challenging, the tropical fruits and local cuisine offer their own delights. The strong sense of community in Siargao, where locals and expats blend together makes it a truly special place. If you’re planning a move, be ready for an enriching experience deeply rooted in Filipino culture and hospitality.

Bottom Line

American citizens living in the Philippines have both special benefits and drawbacks. On the plus side, compared to the US, housing, food, and transportation are more reasonably priced due to the relatively lower cost of living. Expats find the Philippines to be a welcoming place because of the nice people and their great hospitality, and they may also enrich their experiences with the country’s lively culture and varied landscapes. On the other hand, obstacles including sporadic bureaucratic roadblocks, disparate infrastructure levels, and constrained healthcare options can be problematic.

Notwithstanding these difficulties, the Philippines offers a fulfilling experience because of its breathtaking natural beauty, vibrant feeling of community, and chance to fully immerse oneself in a diverse range of cultural experiences. The Philippines offers an amazing and rewarding expat experience for individuals who are prepared to embrace the local way of life and adjust to the peculiarities of living overseas.