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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