Digital Economy contributes 8.4 percent to the Economy in 2023
I. Introduction
The use of digital media and transactions has been part of many activities globally. With the technological advancement in various industries, the digital economy has evolved, and the use of digital technologies has become more accessible. Although these advances in technology resulted in a more complex measurement of the digital economy, there are various country efforts done to measure the contribution of digital activities to the Gross Domestic Product (GDP). However, it was noted that measuring digital activities has been challenging due to issues on definition, classification, and measurement.
In 2019, Philippine Statistics Authority (PSA) through the Macroeconomic Accounts Service (MAS) collaborated with the World Bank (WB) in estimating the size of digital economy and its contribution in the country’s economy. While there is still no internationally agreed definition and classification for the digital economy, the PSA builds on earlier initiatives of other institutions such as the Organisation for Economic Cooperation and Development (OECD), and US Bureau of Economic Analysis (BEA), and the experiences and insights gained through these initiatives.
With the results of the PSA-WB Project, the PSA is committed to continue improving its methodology and exploring other indicators to capture the contribution of digital economy. In 2020, the World Bank released the Philippines Digital Economy Report with initial estimates providing the share of digital economy to GDP.
The pilot estimates on the size and contribution of the digital economy was first released by PSA in October 2022. The estimates provide information on the Gross Value Added (GVA) of e-commerce, digital media/content, and digital-enabling infrastructure, which includes: 1) Computer, electronic and optical products; 2) Wholesale trade, except of motor vehicles and motorcycles; 3) Telecommunication services; 4) Professional and Business services, and 5) Repair of computers and communication equipment. In 2024, Government digital services was included as a new component of the digital economy following the structure of BEA methodology.
II. Data and Data Sources
The data used for the compilation of the preliminary estimates on digital economy are obtained from several sources. Below are the major data sources for the estimation of the size and contribution of the digital economy.
Data | Description / Use | Source Agency |
| Supply and Use Tables (SUT) | The SUT provides more disaggregated information on the structure of the Philippine economy. It also serves as the primary source of information for the technical coefficients or ratios used in estimating the Gross Output and Gross Value Added of Digital-enabling infrastructure, Digital media/ content, and | PSA |
| National Accounts of the Philippines (NAP) | Primary source of information of the overall production and consumption of the economy each year. The Gross Output of Information and publishing, Manufacturing of computer, electronic and optical products, Wholesale trade, Communications, Professional and business services, and Other services of NAP are used as data inputs in the estimation process. | PSA |
| Annual Survey of Philippine Business and Industry (ASPBI) and Census of Philippine Business and Industry (CPBI) | Provides information on the Gross Output of selected industries, and sales from | PSA |
| List of Establishments (LE) | Provides information on the employment in identified digital-related industries and percentage of establishments with e-commerce transactions. | PSA |
| Survey on Information and Communications Technology (SICT) | Provides information on the ratio of establishments which received orders for goods and services via the Internet, as well as percentage of employees using computers with Internet connection or access. | PSA |
| Labor Force Survey (LFS) | Provides information on the total number of employed persons by industry each year. | PSA |
| General Appropriations Act (GAA) | Provides information on the proposed budget allocation of government agencies related to information and communication technology (ICT) services. | Department of Budget and Management (DBM) |
| Staffing Summary | Indicates the number of filled and unfilled plantilla positions in each government agencies. | DBM |
| Annual Financial Report (AFR) | Provides the audited financial report of government agencies. | Commission on Audit |
III. Methodology
III.A. Estimation Methodology
The estimation on the size and contribution of the digital economy in the Philippine economy is measured using the Production Approach or Value-Added Approach. This method consists of summing the GVAs of all industries that are identified as part of the digital economy.
The list of core ICT industries of the Philippines serves as the basis in defining the statistical coverage of the digital economy. These industries represent the digital-enabling infrastructure and digital media/content components of the digital economy. In addition, for more comprehensive coverage, digital transactions or electronic commerce (e-commerce) of the country is also included. Estimates for this component are computed using the percentage of industries with e-commerce transactions or those non-core ICT industries which received orders via the Internet.
For each industry classified as part of the digital economy, the Gross Output (GO) is estimated. The GVA ratio from NAP was applied to GO of each industry to derive the GVA. The sum of GVAs of industries identified as part of digital economy is the total GVA for digital economy.
The benchmark estimates were derived using data from the CPBI and SUT. For the non-benchmark years, relevant indicators from the National Accounts are used to derive the estimates for the corresponding gross output and gross value added of the different components and sub-components.
Digital-enabling infrastructure and Digital media/content
For the benchmark data, the estimation of GO of digital-enabling infrastructure and digital media/content used the structure of CPBI.
Manufacture of computer, electronic and optical products
Wholesale trade, except of motor vehicles and motorcycles
Telecommunications Services and Computer Programming, Consultancy and Related Activities
Office administrative, office support and other business support activities
Repair of computer and communication equipment
Content and Media Industries, Motion picture, video and television programme production, sound recording and music publishing activities, Programming and broadcasting activities, and Data processing, hosting and related activities
c = 5-digit industry under digital-enabling infrastructure and digital media/content from 2018 CPBI
GOs2018 = GO of major industry available in the 80-industry classification in the 2018 SUT that corresponds to each 2-digit industry i, namely:
- Manufacture of computer, electronic and optical products
- Wholesale trade, except of motor vehicles and motorcycles
- Communications
- Professional, Scientific and Technical Activities; Administrative and Support Service Activities
- Other service activities
- Information and Publishing
n = number of 5-digit industry within i number of c
For the non-benchmark years, the gross output of digital-enabling infrastructure and digital media/content are derived using the results from NAP and the structure of the five-digit industries/activities from the CPBI.
E-commerce transactions
For the benchmark data, the estimation of GO of e-commerce transactions utilized the number of non-core ICT establishments that received orders for goods and services via Internet from SICT, and the average sales per establishment from e-commerce transactions from CPBI.
For the non-benchmark years, the gross output of e-commerce activities is derived using the trend of the total e-commerce sales data of industry i from the ASPBI.
Government digital services
For the government digital services, the programs related to supporting the digital economy were identified from the GAA. For each program or activity, the share of government services to total personnel services is computed. The shares derived from the GAA are applied to the audited value in the AFR by national government agency.
Employment in digital economy
For the digital-enabling infrastructure and digital media components, the structure of the LE was utilized to derive the ratio of employed persons in digital economy by industry. The ratio was applied to the LFS data to derive the total number of persons employed by component.
For E-commerce, the proportion of establishments with E-commerce transactions via the internet except social media networks from SICT by industry group served as parameter for the employment structure. The ratio was applied to the LFS data to derive the total number of persons employed by industry.
For the government digital services, the ratio of digital-related services to total personnel services derived from GAA was applied to the staffing summary of each national government agency.
III.B. Digital Economy Tables
The following are the available tables:
Table 1 Gross Value Added of Digital Economy | Presents the value of production of the following sub-components of digital economy: a. E-commerce |
Table 2 Growth Rates of Digital Economy | Presents the growth rates of the seven sub-components of digital economy. |
Table 3 Percent Share to Digital Economy by Sub-component | Presents the share of each of the seven sub-components to the total digital economy. |
Table 4 Digital Economy and GDP | Presents the levels of digital economy and GDP at current prices, as well as the share of digital economy to GDP. |
Table 5 Employment in Digital Economy | Presents the number of employed persons by sub-component of digital economy. |
Table 6 Employment Growth Rates | Presents the growth rates of employment by sub-component of digital economy. |
Table 7 Employment Percent Share | Presents the percent share of employed persons by sub-component of digital economy. |
IV. Concepts and Definition of Terms
The digital economy refers to a broad range of activities, which include the use of knowledge and information as factors in production, information networks as a platform for action and how the information and communication technology (ICT) sector spurs economic growth.
The Philippine approach learned from the experiences and similar efforts of various countries and institutions like the US BEA. BEA defines the digital economy primarily in terms of the Internet and related information and communications technologies (ICT). Conceptually, BEA includes in its definition of the digital economy the following:
Digital-enabling infrastructure needed for a computer network to exist and operate.
Digital transactions that take place using that system (“e-commerce”); and
the content that digital economy users create and access (“digital media”).
Government digital services.
The digital‐enabling infrastructure is comprised of the basic physical materials and organizational arrangements that support the existence and use of computer networks and the digital economy. This includes computer hardware and software, telecommunications equipment and services, and internet of things (Barefoot et al., 2018).
Digital Transactions or electronic commerce (e-commerce) includes all transactions (i.e., the purchase and sale of goods and services) that happen over computer networks. They may be digitally ordered, digitally delivered, or platform-enabled transactions. E-commerce includes business-to-business, business-to-consumer, and peer-to-peer transactions (Barefoot et al., 2018).
Digital media refers to the content that people create, access, store, or view on digital devices such as direct sale digital media, free digital media, and big data (Barefoot et al., 2018).
Other relevant concepts
Digitization refers to the encoding of information or procedures into binary bits that can be read and manipulated by computers and that can take many forms such as the translation of analogue measurements; encoding business and industrial processes; voice over Internet protocol (VOIP); social networks (as alternatives to face-to-face interactions), etc. (Ahmad and Ribarsky, 2018).
Digitalization (Digital transformation) refers to the changes produced by different forms of digitization, the resulting applications, systems, platforms, and the effects on economic and social activity constitute (Ahmad and Ribarsky, 2018).
V. Dissemination of Results and Revision
The schedule of release of the revised digital economy estimates is four months after the reference year. Press release, publication, statistical tables, social cards, and infographics on digital economy are posted on the PSA website.
VI. Citation
Philippine Statistics Authority. (2024). Technical Notes on Philippine Digital Economy Satellite Account. https://psa.gov.ph/statistics/digital-economy/technical-notes
VII. Contact Information
Mr. Gerald Junne L. Clariño
Chief Statistical Specialist
Satellite Accounts Division
(632) 8376-2019
g.clarino@psa.gov.ph
For data request, you may contact:
Knowledge Management and Communications Division
(632) 8462-6600 locals 839, 833 and 834
info@psa.gov.ph
