PH economy seen to grow by just 5.3% this year
The Philippine economy is likely to grow below its potential this year, the regional surveillance group Amro said, as the economic fallout from an expanding corruption crackdown is compounded by repeated climate-related shocks.
In its latest report released Wednesday, the Asean+3 Macroeconomic Research Office estimated that the economy may have expanded by 5.2 percent in 2025, down from a previous forecast of 5.6 percent and slower than the 5.7 percent growth recorded in 2024.
The projection also suggested that growth last year had missed the Marcos administration’s target of 5.5 to 6.5 percent.
That drag is expected to spill over into 2026, with Amro trimming its growth forecast to 5.3 percent, from 5.5 percent previously. While still within the government’s revised target range of 5 to 6 percent, the outlook underscores the risk that the economy may struggle to reach its estimated growth potential of about 6 percent.
Even so, Amro said the Philippines would be the second-fastest-growing economy in the Association of Southeast Asian Nations or Asean+3 bloc, behind Vietnam and ahead of the group’s three largest economies: China, Japan and South Korea.
“The picture for the Philippine economy is that it has been quite steady. But there are some headwinds,” Amro chief economist Dong He told a virtual press briefing.
Overall, the downward revisions underscored the economic costs of the sweeping probe into anomalous flood control projects.
Already, the scandal has dented public confidence, slowed public infrastructure spending and undermined the country’s climate adaptation efforts.
Local economic output grew at 4 percent in the third quarter of 2025, the slowest pace seen in four years.
To help offset the drag, the Bangko Sentral ng Pilipinas cut its benchmark rate by a quarter point to 4.5 percent at its Dec. 11 meeting, bringing total reductions since the easing cycle began in August 2024 to two percentage points.
Government officials last week also met with business leaders to reaffirm their commitment to “big, bold reforms” aimed at strengthening governance and promoting sustainable growth.
Looking ahead, Amro said local authorities should push for reforms that would make the economy more resilient to two major long-term headwinds: climate shocks and disruptions from artificial intelligence (AI).
“Strengthening infrastructure and making the economy more resilient against natural disasters is an important consideration,” he said, while also warning against the threat of AI on the Philippines’ vibrant services export sector.
“In the age of AI, I think the challenge is to upgrade these capacities and reduce the fragility or risks of some of those services being replaced by AI,” he added.
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