Marcos admin seen missing GDP growth target again
The Marcos administration appears to have missed its growth target for a third straight year in 2025, as a modest rebound in the final quarter proved insufficient to offset the damage from a year hobbled by a sweeping anticorruption crackdown and global trade tensions.
Gross domestic product (GDP) is estimated to have expanded 4.2 percent in the final three months of 2025 from a year earlier, according to the median forecast of 14 economists surveyed by the Inquirer.
If borne out, the figure—set to be released on Jan. 29—would represent a slight improvement from the 4-percent growth recorded in the preceding quarter.
Even with that improvement, the estimate indicated that the economy may have grown by an average of just 4.8 percent in 2025, a sharp slowdown from the 5.7-percent expansion in 2024.
The outcome would also fall well short of the government’s 5.5- to 6.5-percent growth target, extending a streak of missed goals that began in 2023.
Excluding the pandemic-driven contraction in 2020, the estimated 2025 performance would mark the weakest annual growth since 2011, when output expanded just 3.9 percent after an antigraft campaign under the Aquino administration curtailed government spending.
More than a decade later, the economy found itself in a familiar bind. President Marcos ordered an investigation into anomalous flood control projects, a scandal that ensnared lawmakers, cabinet members and government engineers. The probe rattled business and consumer confidence and slowed public spending, dragging on economic activity.
The findings of the probe also underscored how corruption undermined efforts to strengthen the country’s defenses against climate shocks, which have grown more frequent and destructive, exacting a heavier toll on economic growth.
Those domestic strains were compounded by lingering global trade uncertainty after reciprocal tariffs imposed by President Donald Trump of the United States disrupted trade flows and fueled sharp volatility in financial markets worldwide last year.
“The weakness reflects the broad fallout from the flood control corruption probe, which dampened public construction, delayed fiscal disbursements and weighed heavily on consumer and business sentiment through the end of the year,” Ruben Carlo Asuncion, chief economist at UnionBank of the Philippines, said. He estimated that the economy grew by 4.6 percent last year.
“High‑frequency indicators also showed sluggish household spending and soft labor‑market conditions as unemployment ticked up and job creation stalled,” Asuncion added.
Meanwhile, economists at Chinabank projected average growth of 4.6 percent in 2025, citing the drag from powerful typhoons. They said the economy nevertheless found pockets of resilience on the trade front as the Philippines—and other countries—sought to adapt to higher US tariffs and take advantage of the artificial intelligence-driven surge in demand for electronics, the Philippines’ top export product.
“Strong typhoons during the quarter may have constrained consumption activities and weighed on agricultural output, particularly palay production,” Chinabank said.
“On a positive note, GDP growth was likely supported by a narrower merchandise trade deficit, driven by robust external demand for semiconductors and ongoing diversification efforts amid protectionist policies in the US,” it added.
To help “compensate” for the negative effects of the graft fallout, the Bangko Sentral ng Pilipinas (BSP) cut its benchmark rate by a quarter point to 4.5 percent last December, bringing total reductions since the easing cycle began in August 2024 to two percentage points. BSP Governor Eli Remolona Jr. has signaled that the end of the central bank’s pro-growth campaign is near, adding that any future decision would be limited to just one additional rate cut.
“We think growth can improve to 5.5 percent in 2026 if execution of realigned budget is carried out effectively,” Jun Neri, lead economist at Bank of the Philippine Islands, said. He expected last year’s growth to have settled at 4.6 percent.
“Investor confidence, which is needed to bring us back to 6 percent to 8 percent growth, can only improve, however, if we stop rewarding lawmakers who violate rules on conflict-of-interest,” he added.
