MANILA – The Philippine economy is poised for accelerated growth in 2025, driven by increased investments and robust consumer spending, according to UBS Investment Bank Global Research. Senior ASEAN and Asia Economist Grace Lim forecasts a 5.9 percent growth for the Philippines in 2025, up from the projected 5.6 percent in 2024.
During a virtual briefing, Lim highlighted that the positive growth trajectory is largely attributed to strong domestic demand, with both investment and consumption expected to rise. She anticipates a gradual recovery in private investments as financial conditions ease and consumer confidence improves.
"We see an improving growth outlook for the Philippines," Lim stated, emphasizing the crucial role of domestic demand. "The underlying positive growth delta is driven by domestic demand as both investment and consumption accelerate in 2025."
Solid labor income growth and the moderation of food inflation are expected to bolster consumption. Additionally, government spending and the continued expansion of services exports, particularly in the Business Process Outsourcing (BPO) sector, will contribute to economic momentum. Lim noted the resilience of the Philippine BPO sector as a key factor supporting growth.
Regarding potential trade tariff escalations, Lim characterized the Philippines as a "rather defensive market" due to its predominantly domestic-oriented economy. She also suggested that the Philippine peso could perform relatively well in the region amidst such scenarios.
On monetary policy, Lim expects the Bangko Sentral ng Pilipinas (BSP) to implement a 50-basis-point reduction in policy rates in 2025, driven by manageable inflation. "We think that BSP has room to cut again in 2025 given that inflation remains manageable and is likely to remain contained within the target range through this year and next year," she said.
She also viewed the recent 200-basis-point reduction in the reserve requirement ratio for banks as a positive development, aligning with the BSP's efforts to enhance liquidity management and deepen financial markets.
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