FINANCE SECRETARY Frederick D. Go is optimistic that the Philippine economy can recuperate and hit the federal government’s growth goal on the back of faster, more productive spending.
Mr. Go said on Friday that he’s “hopeful” that gross domestic product (GDP) growth can reach the federal government’s 5%-6% goal this yr after expansion hit a post-pandemic low in 2025 as a consequence of the fallout from a corruption scandal linked to state infrastructure projects.
“I just must say, though, that the entire yr is 4 quarters. We’re not going to get there in the primary quarter,” he said on the sidelines of an event.
Philippine GDP growth slowed to three% within the fourth quarter from 5.3% in the identical period a yr prior and the revised 3.9% print within the third quarter, the federal government reported on Thursday.
This was the slowest print in nearly five years or for the reason that 3.8% contraction in the primary quarter of 2021. Outside of the pandemic, this was the worst for the reason that 1.8% growth recorded within the fourth quarter of 2009, or throughout the Global Financial Crisis.
This brought full-year 2025 GDP growth to 4.4%, well below the federal government’s 5.5%-6.5% goal. This was slower than 2024’s 5.7% and was the weakest annual expansion for the reason that 3.9% in 2011, counting out the 9.5% contraction in 2020 as a consequence of the pandemic.
These were below the 4.2% and 4.8% median estimates for fourth-quarter and full-year 2025 GDP growth in a BusinessWorld poll.
“We’re growing at 4.4%, so it’s not the top of the world,” Mr. Go said. “But having said that, again, all the basics that allow the economy to grow at 5.5% are intact.”
“Not one of the macroeconomic fundamentals has modified. So, we must always get back on the right track this yr.”
He said they expect public spending to rebound this yr, adding that officials have met to clear the spending program, with the highest five spenders being the Public Works, Education, Health, Agriculture, and Transportation departments.
“The highest five spenders were all there in that meeting, and we agreed with them what their spending can be, how much money can be released. I’m continuously coordinating with DBM (Department of Budget and Management) on the discharge of those funds because we’d like them to flow into within the economy.”
He added that they continue to be committed to fiscal discipline, which implies smart spending while keeping the budget gap manageable.
“I sincerely imagine it’s not about government spending an increasing number of money yearly — it’s about spending the identical amount of cash, perhaps a fair lower amount of cash, but using it for more quality and productive spending on projects which have a high multiplier effect.”
Mr. Go added that he also met with President Ferdinand R. Marcos Jr. on Friday on economic concerns.
RATE CUT
Following last yr’s disappointing growth print, the Bangko Sentral ng Pilipinas (BSP) may deliver a sixth straight cut next month to prop up the economy, Standard Chartered Bank said.
Standard Chartered economist and foreign exchange analyst for ASEAN (Association of Southeast Asian Nations) Jonathan Koh said the BSP has room for an additional 25-basis-point (bp) cut amid sluggish growth and subdued inflation.
“So, with growth being soft, potentially coming in on the lower end of the federal government’s 5-6% forecast for this yr, and with inflation being very benign, well inside the BSP’s 2%-4% goal range, I’m expecting the central bank to chop rates,” he said in a briefing in Makati on Friday. “I’m a 25-basis-point cut in February.”
Standard Chartered’s latest growth forecast for this yr stands at 5.7%, but Mr. Koh said they might cut this to around 5%. The federal government targets 5%-6% growth this yr.
“I feel sentiment needs to show around before we actually see an actual improvement by way of growth,” he said.
He added that a protracted slowdown could give the BSP a reason to increase its easing cycle and deliver one other 25-bp reduction for a terminal rate of 4%.
“I feel if 2026 GDP growth risks falling below 5%, I feel that would potentially result in yet one more [cut].”
The Monetary Board has reduced benchmark borrowing costs by a complete of 200 bps since August 2024, bringing the policy rate to 4.50%.
Last week, BSP Governor Eli M. Remolona, Jr. said one other cut is uncertain, given current economic conditions. He added that while they may consider the GDP data, price stability stays their primary concern.
Mr. Koh also said they see the central bank trimming the reserve requirement ratio (RRR) to assist boost liquidity that would potentially drive domestic demand.
“I feel that’s on the table, potentially (within the) first half of the yr,” he said.
The BSP reduced big banks’ RRR by 200 bps to five% in March last yr. It likewise cut digital banks’ reserve ratio by 150 bps to 2.5%, while that for thrift banks was lowered by 100 bps to 0%.
Meanwhile, Standard Chartered sees the peso trading on the P59-a-dollar level this yr, with the greenback’s persistent weakness and Philippines’ ample foreign reserves to stop it from sliding to the P60 range.
“I might say inside the Asia region, peso might be a currency that we’re a bit more cautious on,” Mr. Koh said.
Downside risks for the peso include weaker service exports because the rise of artificial intelligence and shifting US policies could affect the business process outsourcing sector, in addition to sluggish remittance growth.
Asked if the peso’s weakness could prevent the BSP from easing its policy stance further, Mr. Koh said: “How I see it now, my very own view, is downside growth risk outweighs upside inflation risk.”
The central bank is especially managing the exchange rate to curb inflationary pressures as a weak peso means the country would must spend more on imports comparable to oil, he said.
PUBLIC TRUST
Addressing governance issues can be key to the Philippine economy’s recovery, one other analyst said.
“The strains the Philippines are experiencing right away are twofold: public trust and tariffs,” Alvin Joseph A. Arogo, first vice chairman and chief economist at Philippine National Bank (PNB), said at a British Chamber of Commerce Philippines event on Thursday.
“It is important for the Filipino people to regain public trust to ensure that strong growth to resume,” he said. “We could expect this weakness in public construction to last until the third quarter, using previous historical experience.”
Even with full-year 2025 growth falling well below market expectations and missing the federal government’s goal anew, that is “not a disaster,” Mr. Arogo said, adding that he expects the economy to post a “strong recovery” by 2027.
“A 4% growth is the envy of most developed economies. So, simply to put it into perspective, 4% is slow for the Philippines, but it surely’s not a disaster. A disaster is what happened in 2020, when the economy shrank by near 10%,” he said.
“There’s no must panic, but some things must change. And at the least, even without structural changes, the shift in sentiment alone will allow the Philippines to post stronger growth in 2027. So, 2026 is a critical yr, but recovery next yr is probably going.” — Aubrey Rose A. Inosante, Justine Irish DP. Tabile, and Katherine K. Chan