Philippines expected to grow by 5.4 percent this year

MANILA, Philippines — The Philippines is likely to post a slower economic growth this year due to an expected slowdown in government spending and private investment growth, according to United Kingdom-based think tank Pantheon Macroeconomics.

“We still see growth remaining uninspiring-below the pre-pandemic norm-and slipping to 5.4 percent this year,” Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said in a report.

The think tank’s growth forecast is lower than the 5.6-percent growth posted last year.

It is also below the government’s six to eight percent growth target for this year.

“The minor slowdown we expect in 2025 should be partly because of softer government spending,” Chanco said, noting base effects are no longer expected to provide support.

He said the government’s fiscal consolidation efforts process is also falling behind schedule.

Last year, government spending grew by 7.2 percent, faster than the 0.6-percent growth in 2023.

Chanco also said the country’s economic performance this year may be affected by a slowdown in fixed investment growth.

Investments or gross capital formation expanded by 7.5 percent in 2024.

“To be clear, some of this will merely be a function of fading catch-up growth; this component ended 2024 at 95 percent of the end-2019 level on a seasonally adjusted basis, up further from the recovery rates of 82 percent at end-2022 and 91 percent at end-2023,” Chanco said.

While easing inflation is translating to improved consumer confidence, he said the think tank maintains that a substantial recovery in spending growth is unlikely this year with households still facing growing debt and low savings.

Inflation averaged 3.2 percent last year, lower than the six percent average in 2023.

The government aims to keep inflation within the two to four percent target band this year.