The Philippine economy is navigating challenges from global trade shifts, artificial intelligence advancements and geopolitical tensions, but remains resilient, with an annual growth above 5 percent.
After expanding 5.5 percent in 2023 and 5.7 percent in 2024, the nation’s gross domestic product (GDP) grew 5.4 percent in the first half of 2025, making it one of the fastest-growing economies in Asia.
The economy is underpinned by strong domestic demand, record-low unemployment of 4.3 percent in 2024 and a steady decline in inflation. It is poised to achieve upper-middle-income status in 2025, depending on foreign exchange movements.
US tariffs
Still, the country faces headwinds, including the 19 percent US tariff on Philippine exports and tensions in the West Philippine Sea.
The US recently announced it would impose 19-percent tariff on Philippine goods following talks between President Ferdinand Marcos Jr. and President Trump.
Finance Secretary Ralph Recto said the Philippines is among those “least affected” by the higher US tariff policy.
While acknowledging that such measures are not good for global trade and may affect overall growth, Recto said he remains confident in the country’s fiscal position.
The government is targeting a gross domestic product (GDP) growth of 5.4 percent to 6.5 percent this year. In 2024, the economy grew 5.6 percent, which was lower than the government’s target of 6 percent to 6.5 percent.
From 2026 to 2028, the Philippine economy is projected to expand by 6 percent to 7 percent, a more measured and resilient outlook amid global headwinds.
The projections were lower than the government’s earlier target of 6 percent to 8 percent until 2028.
“To be clear: tempering these targets is not lowering our ambition. It is sound fiscal discipline,” Recto said. “It shows confidence in our ability to deliver, and the wisdom to pace ourselves so we can finish strong.”
“Our refined Medium-Term Fiscal Program now charts a steady, realistic path to reduce our deficit and debt, while creating more jobs, raising incomes, and lifting millions of Filipinos out of poverty along the way,” he said.
Revenue collection
Recto said the Department of Finance (DOF) collected P4.4 trillion in revenues in 2024, exceeding the P4.3-trillion target without imposing new taxes.
He said the government’s revenue effort reached 16.7 percent of GDP, the highest in 27 years.
“Over the past three years, total revenues have grown double-digits, averaging 13.8% annually,” he said. “For the first six months of the year, tax collections continue to post double-digit growth at 10.7 percent”
Debt manageable
Recto stressed that the country’s debt remains sustainable and manageable.
“What people need to understand is that when the Marcos Jr. administration took over in 2022, we inherited P12.8 trillion in debt from past administrations,” he said.
“And we are still repaying these large debts incurred during the pandemic while continuously investing in our people. That is why, for interest alone, we are paying 848 billion pesos this year,” Recto said.
He said the Philippines’ debt is relatively lower than that of most countries in Asia.
Growth strategy
Recto said the government’s growth strategy centers on investing in high-impact sectors and strengthening collaboration with the private sector.
“Through strategic reforms like the Public-Private Partnership (PPP) Code and the CREATE MORE, we strengthen our ability to attract more investors looking to expand or relocate to the Philippines,” he said.
Creating jobs
The DOF chief also said the country is creating more jobs, roughly 6 million, the highest compared to past administrations.
“But we will not rest until the 1.9 million Filipinos still seeking work find not just any job but dignified, secure, and well-paying employment,” Recto said.
In 2023, Recto said the government lifted 2.5 million Filipinos out of poverty since the pandemic.
“And we will make sure to lift 8 million more Filipinos out of poverty by the end of the President’s term,” he said.
Development plan
Meanwhile, the Department of Economy, Planning and Development (DEPDev) unveiled the Midterm Update of the Philippine Development Plan (PDP) 2023-2028. The plan outlines the government’s recalibrated strategy for the second half of President Ferdinand Marcos Jr.’s term.
The updated plan acknowledges that global economic uncertainty, partly due to US tariff policies, could slow multinational expansions and dampen investor appetite, potentially impacting job creation. It also highlights the risks from increased digitalization, cybersecurity threats and the country’s vulnerability to severe weather events and rising sea levels.
AI impact
AI is a double-edged sword. It can boost labor productivity but also displace jobs. In the Philippines, where customer service and call center operations are primarily staffed by Filipino workers, AI has the potential to replace human interaction and jobs within the industry.
Geopolitical tensions, such as those in the West Philippine Sea, and the effects of climate change present significant challenges to a nation’s policies and priorities. The government must find a way to address these issues while simultaneously pursuing its core economic goals.
“Before the end of President Ferdinand Marcos, Jr.’s administration in 2028, the Philippines will sustain rapid economic growth and attain upper-middle-income status,” DEPDev Secretary Arsenio Balisacan said in a statement.
This will be a milestone that reflects the nation’s resilience, determination and sustained commitment to inclusive growth.
Economic targets
The plan sets key economic targets, including GDP growth of 5.5 percent to 6.5 percent in 2025 and 6 percent to 7 percent from 2026 to 2028.
It also projects per capita gross national income (GNI) will reach $4,814 to $4,920 by 2025, rising to $5,882 to $6,081 by 2028.
National government debt-to-GDP is expected to be 56 percent to 59 percent in 2025, declining to 58 percent to 61 percent by 2028.
Still, the best indicators should not only be measured, but felt by the people.
“Improvements in the numbers mean little if these do not translate into meaningful changes in people’s lives,” Balisacan said.
