By Aubrey Rose A. Inosante, Reporter
THE PHILIPPINES is predicted to be the second-fastest growing economy in Southeast Asia in 2025, as further monetary easing boosts domestic demand, the ASEAN+3 Macroeconomic Research Office (AMRO) said on Tuesday.
In its Regional Economic Outlook quarterly update, AMRO said Philippine gross domestic product (GDP) is projected to expand by 6.3% this yr, unchanged from the forecast in December.
“We kept the expansion forecast at 6.3%. That’s amongst the very best within the region and that’s partly since the Bangko Sentral ng Pilipinas (BSP) has began to also ease monetary policy.” AMRO Chief Economist Hoe Ee Khor said at a virtual news briefing on Tuesday.
That is inside the Development Budget Coordination Committee’s 6-8% GDP growth goal for 2025 until 2028.
The expansion projection for the Philippines is the second-fastest amongst Association of Southeast Asian Nations (ASEAN) members, behind Vietnam (6.5%), but ahead of Cambodia (5.8%), Indonesia (5.1%), Malaysia (4.7%), Laos (4.6%), Thailand (3.1%), Brunei Darussalam (3%), Singapore (2.7%) and Myanmar (1%).
Within the ASEAN+3 region, the Philippines can be ahead of China (4.8%), Hong Kong (2.6%), South Korea (1.9%) and Japan (1.3%).
“The (central bank) governor has announced that there’s scope for them to proceed to ease because the actual rate of interest remains to be pretty high. And we see signs that the economy is starting to reply,” Mr. Khor said.
Because it began its easing cycle in August 2024, the BSP has lowered rates of interest by 75 basis points (bps).
BSP Governor Eli M. Remolona, Jr. has signaled a rate cut on the Monetary Board’s first policy meeting on Feb. 13.
AMRO said stronger domestic demand and exports would support its growth outlook for the Philippines.
The think tank said tourism arrivals within the Philippines and Singapore remained below pre-pandemic levels, while the remaining of the region recovered with the assistance of tourists from China.
Data from the Department of Tourism showed that international tourist arrivals increased by 9.15% to five.95 million but missed its 7.7 million goal in 2024.
For 2024, AMRO said the Philippine economy likely grew by 5.8%, falling wanting the federal government’s 6-6.5% goal.
“The Philippines is certainly one of the stronger, faster-growing economies within the region. This yr, we had shaved the expansion right down to 5.8%, but that’s since the third quarter was very weak,” Mr. Khor said.
Within the third quarter, Philippine GDP expanded by a weaker-than-expected 5.2% attributable to bad weather affecting spending and agriculture.
This brought the typical to five.8% in the primary nine months of the yr. Fourth-quarter and full-year 2024 GDP data might be released on Jan. 30.
At the identical time, AMRO kept its headline inflation forecast for the Philippines at 3.2% for 2025, barely lower than the BSP’s 3.3% average forecast. In 2024, inflation averaged 3.2%.
RISKS TO OUTLOOK
Meanwhile, the ASEAN+3 region is projected to grow by 4.2% this yr, same as the expansion in 2024.
ASEAN is forecast to grow by 4.8% this yr, barely faster than 4.7% in 2024.
“Growth might be mainly driven by domestic demand, with firm external demand providing continued support. Nonetheless, regional growth has been revised downward from the 4.4% within the October 2024 update mainly to reflect the baseline assumption of the US increasing tariffs on imports from China within the second half of 2025,” AMRO said.
US President Donald J. Trump has vowed to impose tariffs of as much as 60% on imported Chinese goods and 25% for Canadian and Mexican imports, in addition to a ten% universal tariff.
“The upper tariffs are expected to extend prices within the US and constrain private sector spending. As a serious export marketplace for most ASEAN+3 economies, the resulting decline in demand from the US would weigh on regional exports,” AMRO said.
AMRO said regional growth could possibly be lower by 0.1 percentage point in 2025.
“The impact can be considerably worse if affected economies were to retaliate, with growth being potentially 0.6 percentage point lower as a substitute,” it added.
AMRO said the negative impact would likely construct up in the subsequent few years as demand weakens.
“Consequently, tariff retaliation could end in regional growth declining by 1-2 percentage points by 2026-2027 — marking the slowest regional growth for the reason that Asian Financial Crisis (excluding the pandemic years of 2020-2022),” the think tank said.
Other risks to the regional outlook include a sharper growth slowdown within the US and Europe, tighter global financial conditions, a spike in global commodity prices and shipping costs and slower growth in China.
“Beyond the immediate risk of upper protectionism, the continued geoeconomic fragmentation and geopolitical tensions would weigh on the longer-term growth prospects of regional economies, particularly the trade-dependent ones,” AMRO said.
The region’s aging population and failure to handle climate change could also impact economic growth, it added.
