AMRO projects 5.6% growth for Philippines in 2025, urges reforms

The Philippine economy is expanding steadily, supported by strong domestic consumption and a resilient labour market, though growth is slower than pre-COVID levels, the ASEAN+3 Macroeconomic Research Office (AMRO) said after its September 2–19, 2025 consultation.

The mission was led by principal economist Jinho Choi, with policy discussions involving AMRO director Yasuto Watanabe and chief economist Dong He. Discussions focused on the Philippines’ recent macroeconomic developments, outlook, risks and vulnerabilities, and policy priorities for sustaining growth and maintaining financial stability.

Inflation is projected to rise moderately from 1.8 per cent in 2025 to 3.2 per cent in 2026, remaining within the BSP’s target.

The current account will remain in deficit, but net inflows in the financial account and a robust banking sector—characterised by low non-performing loans (NPL), strong profitability, and ample liquidity—support overall stability. Fiscal consolidation continues but at a slower pace to prioritise growth-enhancing measures. Monetary policy has shifted to easing, with the BSP advised to proceed cautiously given potential supply shocks and a near-zero output gap.

Downside risks include aggressive US protectionist measures, weaker demand from trading partners, tighter global financial conditions, and renewed inflationary pressures. Persistent challenges—such as pandemic scarring, weak infrastructure, and limited manufacturing capacity—are weighing on potential growth, AMRO said.

AMRO urged balancing fiscal consolidation with investments in infrastructure and human capital, upgrading the financial stability framework, and improving monetary policy transmission through deeper liquidity and bond market development. The report also highlighted the need to prepare for climate shocks, enhance competitiveness, and embrace AI through workforce upskilling and private sector investment.

The near-term outlook remains stable, driven by domestic demand, but sustaining medium-term growth will require strategic policy refinements and structural reforms.

“Despite external headwinds, the Philippine economy is expected to continue growing at 5.6 per cent in 2025 and 5.5 per cent in 2026. Growth will be driven mainly by robust private consumption, while private investment and exports will face challenges from US tariff policies. If sustained, the tariff impact—partly offset by front-loaded export orders this year—could weigh more heavily in 2026,” said Dr. Choi.

AMRO expects the Philippine economy to grow 5.6 per cent in 2025 and 5.5 per cent in 2026, driven by strong consumption despite external headwinds.
Inflation will stay within BSP’s target.
Fiscal consolidation, easing monetary policy, and reforms in infrastructure, AI-driven upskilling, and financial stability are key to sustaining medium-term growth.

Fibre2Fashion News Desk (HU)