DBS raises PH GDP growth forecast to 5.8%
Singapore’s DBS Bank has raised its growth forecast for the Philippines this year to 5.8 percent, from 5.4 percent previously, on expectations that disinflation and monetary policy easing this year were “setting the stage for a constructive macroeconomic environment.”
DBS Bank and First Metro Securities Brokerage Corp. also pointed out in their latest market focus report that internal economic drivers, such as domestic consumption, will shield the Philippines from the possible adverse impact of a second Donald Trump presidency.
This pushed DBS to raise its economic growth outlook for the Philippines, which is now expected to grow faster than Thailand (3 percent) and Singapore (2.8 percent).
The mid-term elections are likewise anticipated to provide tailwinds to domestic consumption, which has long been among the Philippines’ key economic drivers.
“More importantly, we expect continued economic and defense support from the United States, given the Philippines’ significance as a key geopolitical ally in the Asia-Pacific region,” they said.
Since Trump claimed victory in the November 2024 US presidential elections, experts have warned that his protectionist policies—increased import tariffs, among others—could hurt equities across the globe, including the Philippines’.
While domestic strength is fueling optimism, First Metro and DBS also recognized that Trump’s promise to restrict immigration could reduce remittances from the US, which accounts for 40 percent of total flows to the Philippines.
Remittances play a number of key roles in boosting the country’s economy, including through foreign exchange inflows and investments.
If remittances decrease, First Metro and DBS warned that investor confidence in Philippine equities may also be negatively impacted. Additionally, they noted that Trump’s plan to lower corporate income tax in the US could encourage companies to bring operations back to the world’s most powerful country, thus cutting the need for foreign employment.
Prolonged higher interest rates stemming from this could also dampen investor confidence, they said.
Still, they explained that the Philippines’ Corporate Recovery and Tax Incentives for Enterprises Maximize Opportunities for Reinvigorating the Economy (CREATE More) law, which reduces corporate income tax for registered businesses to 20 percent from 25 percent, allowed room for growth.
First Metro and DBS maintained their 7,600 year-end forecast for the Philippine Stock Exchange Index, entailing a 16-percent growth from 2024, mostly due to the anticipated domestic consumption rebound and favorable monetary policies.
They likewise forecast Philippine companies’ earnings to grow by 11 percent this year and 7 percent in 2026.
