PHILIPPINE economic growth is predicted to stay inside goal this 12 months, although global trade woes and domestic political uncertainty may cloud the outlook, Fitch Rankings said.
“We expect the Philippines’ economy to expand by 5.6% in 2025, broadly in step with 2023-2024, fueled by the normal growth drivers of enormous public infrastructure investments, services exports and remittance-funded private consumption,” Fitch Rankings said in a peer credit evaluation released Monday.
The credit rater maintained its Philippine gross domestic product (GDP) projection at 5.6% for this 12 months, inside the federal government’s 5.5-6.5% goal.
“Private demand needs to be supported by easing inflation and rates of interest,” Fitch added.
Headline inflation picked as much as 1.7% in September, faster than the 1.5% in August but slower than the 1.9% clip a 12 months ago. This brought the year-to-date inflation to 1.7%, matching the Bangko Sentral ng Pilipinas’ (BSP) full-year forecast.
Earlier this month, the BSP trimmed its key policy rate by 25 basis points (bps) to a three-year low of 4.75%. It has to date reduced borrowing costs by a complete of 175 bps since August last 12 months.
“Nevertheless, domestic political uncertainty could affect investment, with allies of President Ferdinand Marcos doing worse than we expected within the recent midterm elections and a recent corruption scandal,” Fitch said.
Recently, several Public Works officials, private contractors and lawmakers have been linked to multibillion-peso corruption involving government flood control projects.
“Global trade tensions will likely drag on growth, particularly not directly through weaker global demand,” Fitch added.
At the identical time, Fitch Rankings said its “BBB” rating and “stable” outlook for the Philippines, which it last affirmed in April, reflects the country’s strong medium-term growth prospects.
“The ‘BBB’ rating and ‘stable’ outlook reflect the Philippines’ strong medium-term growth, which supports a gradual reduction in government debt/GDP, and the massive size of the economy relative to ‘BBB’ peers,” it said. “The rating is constrained by low GDP per head, despite an upward trend.”
In the primary half, the Philippine economy grew by a mean 5.4%, slower than 6.2% seen in the identical period last 12 months.
For his part, Department of Budget and Management (DBM) Undersecretary and Principal Economist Joselito R. Basilio said third-quarter GDP will likely remain inside goal, driven by private consumption.
“(The GDP is) most definitely on track,” he told reporters on the sidelines of the 2025 Fiscal Policy Conference on Monday. “The goal range is low, right? So, it might be reached very easily,” he added referring to the 5.5-6.5% government goal.
The third-quarter GDP data will probably be released on Nov. 7.
Mr. Basilio said that personal consumption might need picked up within the third quarter amid easing inflation and rates of interest.
“So, maaasahan natin ngayon ’yung private sector driven growth (So, we will now depend on private sector-driven growth),” he added.
Mr. Basilio said he expects GDP growth to stay on track until yearend as the federal government plans to spice up its spending in the approaching months.
The Development Budget Coordination Committee is scheduled to fulfill between late November to early December to review its macroeconomic targets, he added.
‘CORRUPTION KILLS GROWTH’
Meanwhile, GlobalSource Partners’ analysts said massive corruption in flood control projects have weighed on Philippine economy, stopping it from growing over 6%.
“These funds — siphoned through fraudulent contracts and padded budgets — could have built schools, improved hospitals, and created as much as 266,000 jobs. The resulting drag on productivity meant economic growth of 5.5-5.7%, when the economy could have expanded closer to over 6%,” GlobalSource country analysts Diwa C. Guinigundo and Wilhelmina C. Mañalac said in an Oct. 23 commentary.
Finance Secretary Ralph G. Recto earlier said the economy can have lost as much as P118.5 billion between 2023 and 2025 because of these anomalous projects.
“The moral indictment is evident: corruption kills growth, weakens resilience, and erodes trust. When infrastructure becomes a source of personal enrichment reasonably than public service, your complete development agenda collapses,” they added.
For a developing country just like the Philippines, they said good governance is an “economic necessity,” not a “moral luxury.”
“Every peso lost to corruption is a peso withheld from productive investment. When public works are marred by inefficiency and fraud, they not only waste resources but in addition weaken the very foundations of inclusive growth: connectivity, productivity, and resilience,” they said.
“Unmasking corruption in public works, due to this fact, is greater than an anti-graft exercise — it’s a method for resilience and growth. In the ultimate evaluation, essentially the most enduring infrastructure a nation can construct is nice governance itself: a system sturdy enough to resist each earthquakes and temptations.” — Katherine K. Chan