‘Philippines to post over 6% growth this year’

MANILA, Philippines — The Philippine economy is expected to post over six percent growth this year with lower inflation and interest rates to support consumption and investments, according to an official of BDO Unibank Inc.

“Investments and consumption are picking up. And we believe that corporates that have held back on capex the past four years, they will resume capex spending and that should push up Philippine GDP (gross domestic product) to over six percent in 2025,” BDO senior vice president Dante Tinga Jr. said during an economic briefing organized by European chambers.

While inflation has been the major risk to the Philippine economy and the global economy for the past three years, Tinga said the country’s average inflation of 3.2 percent last year was within the central bank’s target range of two to four percent.

Last year was the first time that the average headline inflation was within the central bank target since 2021.

“Stable inflation should allow the central bank to continue lowering rates and that should help boost consumer and business sentiment,” Tinga said.

At its last policy meeting in December, the Monetary Board cut policy rates by 25 basis points, bringing the key rate to 5.75 percent.

Tinga said unexpected commodity supply shocks are seen as a key risk to growth, but both spot and forecast prices have been relatively stable so far.

In terms of the impact of the return of US president-elect Donald Trump, he said the Philippines, which is a minimal goods exporter, is expected to be relatively insulated from protectionist trade policies.

Trump earlier proposed to impose tariffs on all US imports to raise revenue and protect American industries.

“If the policies of the new US administration translate to a stronger dollar, heightened exchange rate volatility, that’s actually the indirect risk to the Philippine economy’s growth trajectory,” Tinga said.

He said what the country needs to look out for is the resurgence in interest rate and exchange rate volatility that may slow the capex recovery or investment recovery.

The government is aiming for six to eight percent growth for this year.

From January to September last year, the Philippine economy grew by an average of 5.8 percent, below the government’s six to 6.5 percent target for 2024.

The Philippine Statistics Authority will report on the country’s 2024 economic performance later this month.