gross domestic product (GDP) – Page 4

S&P Global Ratings Says Philippine Economy Will Grow Only 5.6% This Year

October 3, 2025September 24, 2025carlocarrasco

2025 continues to look rough for the Philippines. A lot of people are angry over government corruption and the flood control projects scandal investigation is only adding fuel to the fire. When it comes to economic growth, S&P Global Ratings says the economy of the Philippines will grow by only 5.6% this year, according to a Philippine Star news report.

To put things in perspective, posted below is an excerpt from the Philippine Star news report. Some parts in boldface…

S&P Global Ratings has trimmed its growth forecast for the Philippines to 5.6 percent this year from its earlier 5.9 percent estimate, citing subdued private consumption and investment alongside persistent global uncertainties.

The downgrade reflects weaker-than-expected momentum in the first half, when Philippine gross domestic product (GDP) grew by 5.4 percent. This was faster than many economies in Asia, but still below trend and short of expectations.

“Private consumption growth, investment and household confidence are still relatively subdued,” S&P economist Vince Conti told The STAR.

“We expect that both global and domestic uncertainty would continue to weigh on investment growth in the near term,” Conti said.

S&P’s latest projections show the country’s GDP growth will hit the government’s 5.5 to 6.5 percent target for 2025.

The credit watcher also sees growth picking up to 5.8 percent in 2026, though this remains below the government’s more ambitious six to seven percent goal for next year.

Conti noted, however, that the country’s reliance on external demand comes more from services rather than goods trade, which provides a degree of resilience against heightened global trade frictions.

“This will partially mitigate the impact of the elevated trade tensions,” he said. “On the positive side, with inflation low and likely to remain under control in the next few years, the Bangko Sentral ng Pilipinas (BSP) has room to continue its easing path to support growth.”

S&P expects Philippine inflation to average 1.8 percent in 2025, sharply down from 3.2 percent last year, before rising moderately to three percent in 2026 and 3.3 percent in 2027.

The credit watcher is penciling in around 100 basis points of further policy rate cuts by the BSP between now and end-2026, which could help shore up domestic activity.

Let me end this post by asking you readers: What is your reaction to this development? Do you think the economy of the Philippines does not have enough momentum to achieve 6% growth this year? Do you think that any rise of inflation will hamper economic growth?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Funding For Philippine Startups Falls 55% To $86.4M In First Half of 2025

September 28, 2025September 18, 2025carlocarrasco

Startups here in the Philippines secured $86.4 million in equity funding during the first half of this year which translates to a very sharp drop of 55% when compared to a year earlier, according to a news report by BusinessWorld.

To put things in perspective, posted below is an excerpt from the BusinessWorld news report. Some parts in boldface…

PHILIPPINE startups secured $86.4 million in equity funding in the first half of 2025, down 55% from a year earlier and lagging most of its Southeast Asian neighbors, according to a report by Kickstart Ventures, Inc., the corporate venture capital arm of Globe Telecom, Inc., and Singapore-based business news platform DealStreetAsia.

The Philippines raised about P4.91 billion from 15 disclosed deals in the six-month period, lower than the P10.86 billion ($191 million) recorded in the same period last year.

By deal value, the country trailed Singapore ($1.21 billion), Vietnam ($275 million), and Malaysia ($196 million). It only surpassed Indonesia ($78 million) and Thailand ($10 million), while Cambodia did not disclose figures.

Across Southeast Asia, startup equity investment fell by 20.7% year on year to $1.85 billion, the lowest in six years.

Joan Yao, general partner at Kickstart Ventures, said funding deals slowed after digital activity peaked in 2021 and 2022 at the height of coronavirus lockdowns.

“I think to some extent, as the effects of COVID died down… [digital] activity became more balanced between online and offline,” Ms. Yao said during a media briefing on Wednesday.

Philippine startups had raised $456 million and $481 million in the first halves of 2021 and 2022, respectively, before declining sharply as global investors scaled back.

Ms. Yao cited the tight monetary policy in the United States, when the US Federal Reserve hiked interest rates from March 2022 through July 2023 to curb inflation.

“A lot of the global investors that were coming to invest in the Philippine market or Southeast Asia pulled back a little bit from their investment activities because of the higher cost of capital,” she said.

The report said investors have become more selective, favoring companies with stronger governance and clearer paths to profitability.

Let me end this post by asking you readers: What is your reaction to the recent developments? Were you surprised to see the Philippines’ startups attracting much less equity funding from global investors? What do you think the government should do to convince global investors to invest more in startups here in the Philippines?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippines Has The Highest Debt Risk In Asia According To New Economic Study

September 27, 2025September 18, 2025carlocarrasco

With its recent economic study, Oxford Economics declared that the Philippines has the highest debt risk among its Asian neighbors and the biggest contributor to the risk is the nation’s limited internal policy space, according to a Manila Bulletin news report.

To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…

Constrained fiscal and monetary policy space, along with increasing reliance on foreign debt, has placed the Philippines at the highest sovereign risk, or the greatest risk of failing to meet its debt obligations, among its Asian peers.

According to a Sept. 10 report by the think tank Oxford Economics, the Philippines recorded the highest sovereign risk score among 12 Asian economies, at 4.5 out of 10. The biggest contributor to this risk is limited internal policy space, referring to the country’s relatively narrow fiscal and monetary flexibility compared with its peers.

The second-largest factors are external imbalances—measured by current account and trade deficits—along with the size of the economy, and institutional risks. Other contributors include political risks, the business environment, vulnerabilities in the banking sector, and corporate debt.

India ranked second in sovereign risk, followed by China, Vietnam, Malaysia, Thailand, and Indonesia. Meanwhile, Japan, Singapore, South Korea, Hong Kong, and Taiwan were assessed to have the lowest risk levels.

Sovereign risk refers to the possibility that a government may default on its debt by failing to meet interest or principal payments.

“On the fiscal front, the stubborn bias towards fiscal conservatism is likely to persist, following the broad unwinding of pandemic-era discretionary support,” Oxford Economics lead economist Alexandra Hermann said.

However, given that “around half of the region’s economies are likely to fall short of their official growth estimates this year, and the remainder only just meeting stated targets, the political economy of growth underperformance could tilt authorities towards further incremental easing going into 2026.”

For the Philippines, the government is targeting a growth rate of 5.5 to 6.5 percent for 2025—a downscaled version of the more ambitious goal of six to eight percent previously.

While governments in Asia, including the Philippines, could implement measures to soften the impact of weaker exports, the think tank noted that economic growth would still be slower than normal. Philippine gross domestic product (GDP) growth averaged 5.4 percent in the first half of the year.

“On the monetary side, most central banks have room to cut further as real rates are still elevated compared to pre-pandemic norms, despite pre-emptive cuts this year particularly in emerging Asia,” Hermann said.

To recall, the Bangko Sentral ng Pilipinas (BSP) aggressively hiked lending rates to as high as 6.5 percent in 2024 to tame raging increases in consumer prices brought about by the Covid-19 pandemic.

Hermann expects the Philippine central bank alongside other Southeast Asian central banks to further reduce key borrowing costs by as much as three quarters of a point by early next year, similar to what they did previously during economic slowdowns.

“We anticipate an additional 25-75 bps [basis points] of rate reductions across India, Indonesia, the Philippines, and Thailand, completing an easing cycle by early 2026 that is broadly consistent in scale with prior non-recessionary slowdowns,” Hermann said.

Should the BSP reduce the key policy rate by up to 75 bps though the first half of 2026, the current five percent could be brought down to 4.25 percent. For this year alone, the BSP has so far lowered rates by a cumulative 75 bps, citing still subdued inflation and risks to slower growth.

In another Sept. 10 report of the think tank, the BSP and other central banks are seen to be “hawkish despite low inflation.” BSP Governor Eli M. Remolona Jr. earlier signaled a still accommodative stance but now less dovish.

Let me end this post by asking you readers: What is your reaction to the recent developments? Do you think the Philippines will be able to reduce its sovereign risk? What do you think should be done about the debt risk the country has? Do you think the high debt risk could turn off foreign investors?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Moody’s Predicts 5.7% Growth for Philippine Economy in 2025

September 7, 2025September 1, 2025carlocarrasco

Based on its latest economy research, Moody’s Ratings announced that the economy of the Philippines will achieve 5.7% growth for the year 2025, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of the BusinessWorld. Some parts in boldface…

THE PHILIPPINE ECONOMY is on track to grow by 5.7% this year on the back of strong household spending, steady remittances and sustained public investments, Moody’s Ratings said.

“We expect the Philippines to maintain strong economic growth relative to regional and rating peers,” Moody’s said after the completion of a periodic review of Philippines’ credit rating.

“Growth will be supported by resilient household consumption, stable remittance inflows from overseas workers, and public investment spending, and ongoing structural reforms,” it said in a report.

Moody’s forecast is within the government’s revised 5.5-6.5% gross domestic product (GDP) growth target for this year.

In the second quarter, GDP expanded by an annual 5.5%, up from 5.4% in the first quarter but slower than the 6.5% in the same period last year. For the first half, GDP growth averaged 5.4%, slower than the 6.2% a year ago.

Moody’s flagged downside risks to the outlook arising from the US tariff policies.

“Although the Philippines’ exposure to trade and global value chains is relatively low, uncertainty around US trade policy and tariffs presents some downside risks to domestic consumption and investment,” it said.

Since Aug. 7, the United States has been imposing a 19% tariff on Philippine goods entering the US. The US is one of the top destinations for Philippine-made goods.

Growth will also be supported by its fiscal consolidation efforts, but Moody’s flagged the government’s high debt stock and interest burden.

“Fiscal consolidation efforts are on track to meet the government’s revised Medium-Term Fiscal Framework of reducing the deficit to 4.3% of GDP by 2028, supported by the implementation of reform measures at enhancing revenue collection and spending efficiency,” Moody’s said.

While this will help temper Philippines’ debt burden, Moody’s said debt will remain “above pre-pandemic levels.”

As of June, the Philippines’ sovereign debt hit a fresh high of P17.27 trillion, up 11.5% from P15.48 trillion in the same month in 2024.

This brought the debt-to-GDP ratio to 63.1% at the end of June, the highest ratio since 2005. This is above the 60% debt-to-GDP threshold considered by multilateral lenders to be manageable for developing economies.

“Debt affordability, measured by the ratio of interest payments to revenue, is expected to weaken over the next two years, before gradually normalizing as global refinancing rates decline and economic growth returns to its long-term trend,” the debt watcher said.

“Despite rate cuts by the central bank since the second half of 2024, elevated government funding costs and a lag in the monetary policy transmission will keep interest burden higher,” it added.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think Moody’s Ratings of a 5.7% economic growth for 2025 will turn out true? What do you think it will take for the Philippine economy to reach 6% growth this year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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UA&P Sees Stronger Q3 Economic Growth for the Philippines Despite Trump Tariffs

September 1, 2025August 25, 2025carlocarrasco

As far as the University of Asia and the Pacific (UA&P) is concerned, the economy of the Philippines will still grow stronger in the 3^rd quarter by 5.8% despite the 19% Trump tariffs, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…

PHILIPPINE economic growth may pick up in the third quarter despite higher US tariffs and “milder” typhoons, the University of Asia and the Pacific (UA&P) said.

“Despite the Trump tariffs, milder typhoon season will help accelerate GDP expansion in Q3 to 5.8%, given a low base in 2024,” it said in its latest The Market Call released on Friday.

If realized, this would be faster than 5.2% in the third quarter of 2024 and 5.5% print in the second quarter. This forecast is also within the government’s revised 5.5% to 6.5% target this year.

“Consumer spending remains strong, aided by low inflation but limited by new US taxes on OFW (overseas Filipino Worker) remittances,” UA&P said.

Inflation cooled to a near six-year low of 0.9% in July as utilities and food costs continued to ease. This brought the seven-month average to 1.7%, slightly below the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target band.

UA&P said government infrastructure spending may also regain momentum in the third quarter. This was after state spending slumped due to the 45-day election ban on public works spending from March 28 to May 12.

UA&P said residential construction will remain subdued due to elevated policy and interest rates.

The Bangko Sentral ng Pilipinas (BSP) has so far lowered borrowing costs by a total of 125 basis points (bps) since it began its easing cycle in August last year. The policy rate now stands at 5.25%.

UA&P said the US dollar rate will “move either way” depending on rate cuts by the BSP and the US Federal Reserve.

“The peso-dollar rate has a fundamental depreciation bias although it will depend much on extent and timing of policy rate cuts by BSP and the Fed,” it said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines will be able to grow stronger in the 3^rd quarter even though the 19% Trump tariffs are already in effect? Do you see any signs of Philippine exports to America slowing down already?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippine Economy Grew by 5.5% in 2nd Quarter of 2025

August 9, 2025August 7, 2025carlocarrasco

The economy of the Philippines expanded by 5.5% during the 2^nd quarter of 2025, according to a GMA Network news report. Among the factors are strong 2^nd quarter gains by the agriculture, forestry, fishing, industry and services sectors.

To put things in perspective, posted below is an excerpt from the news report of the GMA News. Some parts in boldface…

The Philippine economy grew marginally quarter-on-quarter in the second quarter of 2025 amid the growth seen in services, agriculture, and industry sectors, and posted a deceleration from the same period last year, according to the Philippine Statistics Authority (PSA).

The country’s gross domestic product (GDP) — the value of goods and services produced in a period — grew slightly faster by 5.5% in the April to June 2025 compared to the 5.4% growth seen in the January to March 2025 period, PSA chief and National Statistician Claire Dennis Mapa reported at a press conference in Quezon City on Thursday.

The second quarter GDP growth was the fastest in four quarters, however, it was still slower than the 6.5% growth rate in the same period in 2024.

All major economic sectors posted annual growth during the quarter — agriculture, forestry, and fishing with 7.0%, industry with 2.1%, and services with 6.9%.

The PSA attributed the year-on-year growth to wholesale and retail trade, repair of motor vehicles and motorcycles with 5.1%; public administration and defense, and compulsory social security with 12.8%; and financial and insurance activities with 5.6%.

Fixed capital investments climbed 2.6%, led by private construction which grew 11.2%, and investments in durable equipment up 10.6%.

Government spending posted an 8.7% growth rate during the quarter, slower than the 18.7% seen in the first quarter, which Department of Economy, Planning, and Development (DepDev) Secretary Arsenio Balisacan attributed to the election spending ban.

“We expect to maintain that momentum in the spending side. I think that the next half, the second half of the year, you should see improvements in the construction, public construction spending,” he said in a briefing.

While the election spending ban hit government spending, officials said the campaigns boosted household spending which grew by 9.5%, faster than the 5.29% in the previous quarter, and the 5.4% in the second quarter of 2024.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines will be able to accelerate to achieve 6% gross domestic product (GDP) growth for the entire year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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ADB sees Philippine economy growing by 5.6% this year

August 1, 2025July 24, 2025carlocarrasco

By pointing to a variety of factors, the Asian Development Bank (ADB) recently announced that the economy of the Philippines will grow by 5.6% this year, according to a news article by the Philippine News Agency (PNA). The ADB recently released its latest economy report.

To put things in perspective, posted below is an excerpt from the first PNA news article. Some parts in boldface…

The Philippines is expected to post the second highest economic growth in Southeast Asia this year despite the downgrade in growth outlook due to external headwinds, a report released by the Asian Development Bank (ADB) showed.

In its Asian Development Outlook July 2025 report released on Wednesday, the ADB said Philippine economic growth is expected to settle at 5.6 percent this year.

The growth outlook for the Philippines is the second highest in Southeast Asia, next to Vietnam’s 6.3 percent. Indonesia is projected to grow by 5 percent, Malaysia by 4.3 percent, Singapore by 1.6 percent, and Thailand by 1.8 percent.

For 2026, growth is expected to slightly pick up to 5.8 percent.

The ADB’s latest projection, however, was lower than its 6 percent for 2024 and 6.1 percent for 2025 economic growth forecast amid external headwinds. The Philippine economy grew by 5.4 percent in the first quarter of the year.

“Domestic demand grew 6.7 percent, supported by easing inflation and monetary policy. However, net exports dragged on growth as brisk imports outpaced exports,” the ADB said. It added that manufacturing index (PMI) recovered slightly to 50.7 in June from 50.1 in May.

“Consumer sentiment was positive in the near term. Unemployment was low at 3.9 percent in May, and remittance growth of 3.0 percent helped sustain household spending,” it said.

The ADB, however, said that business confidence softened amid heightened global policy uncertainties.

According to the ADB, economic forecasts for most countries in Southeast Asia have been downgraded for 2025 and 2026 due to the continuing global growth slowdown and increased trade uncertainty.

“Weaker external conditions have hurt business and consumer sentiment and threaten to disrupt investment in the subregion,” it said.

“Except for Indonesia, the largest economy in the subregion, all Southeast Asian economies are expected to post weaker growth in the next two years.”

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think it is still possible for the economy of the Philippines reach 6% GDP growth by the end of 2025?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Department of Finance (DOF) says 6% economic growth is quite difficult to achieve this year

July 31, 2025July 23, 2025carlocarrasco

The uncertainty about this year’s economic growth for the Philippines has gotten stronger as the Department of Finance (DOF) admitted that achieving 6% growth is quite difficult, according to a Manila Bulletin news report. The DOF pointed to external shocks that are affecting the national economy.

To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…

While the Philippine economy has already been recovering from its deep recession during the height of the Covid-19 pandemic, hitting its growth potential of six percent would be challenging given the global uncertainties spilling over domestically, according to the Department of Finance (DOF).

“We do think that the potential of the Philippines is at the minimum six-percent growth. But of course, it’s quite difficult, especially knowing some of the challenges that we’re seeing,” DOF Undersecretary and Chief Economist Domini Velasquez told reporters during the Philippine thrift banks’ annual convention on Tuesday, July 15.

Just before the initial three-month pause on reciprocal tariffs ended on July 9, United States (US) President Donald Trump had stretched it to Aug. 1, but hiked the rates for Philippine exports to 20 percent from 17 percent previously, repeatedly citing the “significant and persistent trade deficit” that the trade giant has with its former colony.

Velasquez noted that the tariff hike was among the uncertainties that the Cabinet-level Development Budget Coordination Committee (DBCC) had considered in downscaling its growth target for the year, through 2028.

Last month, the economic team slashed its 2025 GDP growth target to between 5.5 percent and 6.5 percent from six- to 6.5-percent previously. Cited as factors were heightened external uncertainties, especially the ongoing conflicts in the Middle East and the imposition of US tariffs.

Finance Secretary Ralph G. Recto told reporters during an informal press chat on Wednesday, July 16, that he expects the economy to accelerate “significantly” in the second quarter compared to the previous quarter.

“In effect, the target is still six percent for the year,” Recto noted, taking off from the recently revised growth goal. “Realistically, it’s probably around 5.7 percent or 5.8 percent for the year. It depends, because there’s a lot of uncertainty—uncertainty with trade policy.”

“But I think the second quarter will definitely be better than the first,” Recto said, noting that the improvement will be driven by both government and household consumption.

The DBCC had also narrowed the growth target range for 2026 to 2028 to six to seven percent, from the previously more ambitious six to eight percent.

“We did recognize those [tariffs]. When we dialed down on our growth target in 2025, it’s really because of the external factors that we were seeing,” Velasquez said.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the national economy is not strong enough to achieve 6% GDP growth by the end of this year? What do you think the national government should do to strengthen economic growth and make the Philippines more attractive to foreign investors? Do you think the Philippines still has a chance to convince America to lower its planned tariff on Philippine-made goods?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Domestic travel leading recovery of Philippine tourism industry

July 15, 2025July 11, 2025carlocarrasco

While it is a fact that the Philippines is failing on attracting visitors from overseas, the real estate advisory firm Leechiu Property Consultants (LPC) pointed to domestic travel as the key to the industry’s recovery, according to a news article by the Philippine News Agency (PNA).

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

Domestic travel continues to lead the recovery of the Philippine tourism industry, with its receipts able to make up for the “shortfall” in international arrivals, real estate advisory firm Leechiu Property Consultants (LPC) said Thursday.

“Domestic travel is so big. It’s so big and strong that it can make up for, now in the short term, the shortfall of international arrivals,” Alfred Lay, LPC director for Hotels, Tourism, and Leisure, said during the presentation of the LPC Q2 2025 Philippine Property Market Report in Makati City.

“It can do that for a long time, and the long-term goal for domestic tourism would probably to double (its) size within the next five to 10 years.”

Lay noted that domestic tourism expenditure in 2024 reached PHP3.16 trillion, surpassing the pre-pandemic level of PHP3.14 trillion in 2019. Tourism contributed 8.9 percent of the country’s gross domestic product (GDP) last year.

International tourism expenditures, on the other hand, stood at PHP699 billion, up from PHP600 billion pre-pandemic levels, despite missing the 2024 targets.

In an interview, Lay said he expects inbound arrivals this year to reach at least six million.

He noted that the arrival of South Korean visitors, the Philippines’ top market, has seen a decline in the past five months, likely due to the “negative media coverage” in South Korea over security issues in the country, but long-haul tourists are increasing and have offset the decline.

According to the LPC report, Korean arrivals in the first five months of 2025 dipped 19 percent to 552,000 from 682,000 in the same period last year, while inbound arrivals from the United States, Japan, Australia, and Canada surged between 9 percent and 19.4 percent.

Additional routes and flight frequencies, he said, are likewise expected to sustain this upward momentum.

Meanwhile, Lay addressed news coverage about the affordability of travel to the Philippines, stating that the country only ranks in the “middle of the pack” in terms of hotel average daily rates (ADR) compared to Southeast Asian neighbors and competitors.

The LPC report showed that the Philippines ranks fourth in hotel ADR at PHP6,048, with Thailand (PHP8,171), Cambodia (PHP6,591), and Vietnam (PHP6,359) in the top three places.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the tourism industry of the Philippines will do better this year with domestic travel as the main factor? Do you think it is still possible for the Philippines to attract at least six million foreign tourists by the end of this year? Do you think both the national government and private sector should work together to improve local infrastructure so that the cost of travel will go down?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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World Bank says Philippines economic growth will be below 6% per year until 2031

June 3, 2025June 3, 2025carlocarrasco

By pointing to several economic factors, the World Bank stated that it expects the economy of the Philippines to grow less than 6% per year until the year 2031, according to a Manila Bulletin news report.

To put things in perspective, posted below is an excerpt from the news article of the Manila Bulletin. Some parts in boldface…

The Philippines’ annual economic growth is expected by the World Bank Group (WBG) to remain below six percent this year until 2031.

Its newest country partnership framework (CPF) for the Philippines, covering fiscal years (FYs) 2026 to 2031, showed that the WBG forecasts Philippine gross domestic product (GDP) growth of 5.3 percent for this year, 5.4 percent for next year, and 5.5 percent for 2027—all below the more ambitious six- to eight-percent target of the Marcos Jr. administration for the second half of its term.

“The average GDP growth forecast for 2025 to 2027 is expected at 5.4 percent. Risks are mostly tilted downside and include potential retaliation by main global players that may affect global growth further, probably hitting domestic growth,” the WBG said, referring to the lingering world trade uncertainty caused by United States (US) President Donald Trump’s tariff spree.

“Increased uncertainty could trigger instability in financial markets and capital flight,” it added.

On the flipside, “the Philippines may benefit from improved margins of preference for key export products, and from lower global commodity prices (tied to lower global growth), and absent any external pressures, the prospect of continued monetary policy rate normalization” in the next three years, the WBG said.

This year, its projected 5.3-percent GDP growth rate—poised to be the slowest pace of expansion since the Philippine economy gradually reopened from the most stringent Covid-19 restrictions—was attributed by the WBG to “the direct impacts of the higher tariffs and trade policy uncertainty on demand for exports, the effects of increased global policy uncertainty on investment demand, and the indirect effects on export and investment demand through lower global growth.”

But on the upside, “these negative effects are dampened as the Philippines is mostly integrated in services rather than merchandise value chains (that have been most affected by trade policy barriers), and as public investment and private investment in non-tradables is expected to remain robust,” the WBG added.

Philippine GDP growth is seen picking up gradually to 5.7 percent in 2028, 5.8 percent both in 2029 and 2030, and 5.9 percent in 2031.

The WBG forecasts headline inflation to be in the range of three to 3.2 percent from 2025 to 2031—within the targeted two- to four-percent annual consumer price increases deemed conducive to economic growth.

As the Marcos Jr. administration embarks on fiscal consolidation to narrow the yawning budget deficit and lower the share of public debt to the economy following massive borrowings at the height of the pandemic, the WBG projected the fiscal deficit narrowing gradually from 5.7 percent of GDP in 2024 to 5.4 percent in 2025, 4.9 percent in 2026, 4.4 percent in 2027, 4.1 percent in 2028, 3.9 percent in 2029, 3.7 percent in 2030, and 3.6 percent in 2031.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines currently does not have enough strength to exceed the crucial 6% mark for annual growth?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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