MANILA – The Philippine economy is expected to maintain a solid growth trajectory in 2025, with a projected expansion of over 6%, driven largely by consumer spending and stable inflation rates, according to key financial analysts.
Ritchie Teo, chief investment officer at Sun Life Investment Management and Trust Corp., forecasted a growth rate of 6.2% for the year, up from 5.6% in 2024. The improvement in consumption, which had been affected by inflation in previous years, is expected to play a central role in this recovery.
“The Philippines is still very much consumption-driven. So, with inflation rates growing lower, we think that consumption will be rebounding for this year. So that’s the main driver still,” Teo remarked during a briefing in Makati City.
Meanwhile, Jonathan Koh, economist and foreign exchange analyst for Asia at Standard Chartered, also anticipated a 6% growth, placing it within the government’s 6% to 8% forecast range, though on the lower end.
“(This is) at the lower bound of the government’s 6 (percent) to 8 percent forecast range. So, it’s below potential but it’s still one of the fastest-growing economies in the region,” Koh stated.
Both experts pointed to stable remittance inflows as a contributing factor to the positive outlook for household consumption.
With inflation easing, both Teo and Koh foresee inflation averaging around 3.1% for the year, well within the target range set by the Bangko Sentral ng Pilipinas (BSP) of 2% to 4%. In January, inflation settled at 2.9%, while February data, to be released on March 5, is expected to fall within the 2.2% to 3% range.
As inflation cools, the BSP is expected to have the leeway to reduce interest rates further, aiding economic growth. Teo anticipates two to three rate cuts this year, with the first likely occurring in April, while Koh expects a 75 basis-point reduction spread over three separate cuts, with the first in June, followed by another in August, and a final one in the fourth quarter.
Koh emphasized, “If you have a relatively somewhat stable growth, and you have inflation relatively benign, we actually think that there’s room for further easing.”
The outlook reflects optimism for a stable and resilient Philippine economy, even as it faces global uncertainties. Despite the forecasted moderate growth, the country is expected to remain one of the region’s fastest-growing economies in 2025. (With a report from the Philippine News Agency)/PN
