The Bangko Sentral ng Pilipinas (BSP) forecasts that the Philippine economy will likely achieve growth at the lower end of the government’s 6-8% target for 2025 and 2026. This projection comes amid concerns over elevated global commodity prices and ongoing trade uncertainties, which could weigh on the country’s economic momentum.

Factors Influencing Economic Performance

In its latest Monetary Policy Report, the BSP acknowledged that while domestic economic activity remains resilient, growth is expected to moderate compared to previous forecasts. The central bank projects real GDP growth to “settle near the lower bound” of the Development Budget Coordination Committee (DBCC)’s 6-8% target range.

For 2024, the economy expanded by 5.6%, below the DBCC’s revised target of 6-6.5%. This shortfall was attributed primarily to a slowdown in services and a contraction in agriculture during the fourth quarter. Specifically, fourth-quarter GDP growth was 5.2%, down from 5.5% during the same period in 2023.

Global Economic Challenges

The BSP indicated that persistent global commodity prices are likely to impact economic activity negatively. While the central bank’s monetary easing provides some mitigation, global uncertainties—particularly concerning US trade tariffs—pose additional risks. US tariffs on steel and aluminum, along with additional sectoral tariffs scheduled to take effect on April 2, 2025, contribute significantly to these concerns.

Domestic Consumption and Investment Trends

Domestically, the BSP highlighted a moderation in consumption growth, resulting from storm impacts in late 2024, which led to a neutral output gap, indicating limited demand-driven inflationary pressures. Household spending, accounting for over 70% of GDP, grew by 4.7% in the fourth quarter, slowing from 5.2% in the third quarter and 5.3% in the same quarter of 2023. Annually, private consumption moderated to 4.8% from 5.6% in 2023.

Investment demand has also weakened due to subdued global economic conditions and geopolitical tensions, further influencing the tempered economic outlook.

Anticipated Economic Reports

The Philippine Statistics Authority (PSA) will release first-quarter GDP data on May 8, 2025, which will offer clearer insights into the country’s economic trajectory for the year.

Sources and References

• Philippine Statistics Authority (PSA) Economic Data Releases

• Bangko Sentral ng Pilipinas (BSP) Monetary Policy Report

• Development Budget Coordination Committee (DBCC) Economic Projections