MANILA, Philippines—Unicapital expects the Philippine economy to end 2025 on a strong note, citing macroeconomic tailwinds despite external risks.
The brokerage firm said in a mid-year briefing on Wednesday the country’s gross domestic product (GDP) would likely grow 5.5 percent this year, although this is lower than the previous forecast of 6.3 percent. The firm described this as a “more cautious” outlook due to external and domestic headwinds that could impede economic activity.
The economy grew 5.4 percent in the first half of 2025, data from the Philippine Statistics Authority (PSA) showed.
Despite this, the Philippines is still expected to post one of the fastest GDP growths in Southeast Asia this year, along with Vietnam.
Growth is expected to be driven by strong household consumption, robust government infrastructure spending and recovering private investments, Unicapital said.
Increased capital outlays and public construction have also accelerated activity in the industry and services sectors, while low inflation and interest rate cuts have supported spending and borrowing, it said.
Unicapital also lowered its year-end inflation forecast to 2.0 percent from a previous estimate of 3.1 percent. The new forecast is slightly higher than the government’s 1.6 percent projection but remains within the Bangko Sentral ng Pilipinas’ (BSP) 2 percent to 4 percent target for the year.
Unicapital attributed the lower inflation forecast to continued declines in rice prices and an expected easing of oil prices.
“Filipinos are feeling a lot more optimistic as inflation averaged just 1.8 percent in the first half of 2025, the lowest first-half average in over a decade, well below earlier expectations,” the firm said.
It said the decline in rice prices was largely driven by the government’s decision to cut rice import tariffs from 35 percent to 15 percent, a law signed in July 2024.
The average price for regular milled rice dropped from P42.77 per kilogram in early June to P42.53 by the end of the month.
Global oil prices are expected to stay between $60 and $70 per barrel, down from an average of $80 in 2024. The projection is supported by sufficient supply from oil-producing nations and softer global demand.
Unicapital, however, noted that geopolitical risks in the Middle East could trigger short-term price spikes in the local market, affecting inflation. “In the Philippines, oil remains a key inflation risk, with every $10 increase in oil potentially adding 0.6 percentage points to inflation and widening the current account deficit,” the report said.
With inflation expected to soften, Unicapital projects further easing of key policy rates through potential BSP rate cuts in the remaining months of the year. The BSP Monetary Board has already lowered key policy rates by 50 basis points (bps) to 5.25 percent.
The firm anticipates another potential 25 to 50 bps rate cut in August and October, which could bring key interest rates down to 4.75 percent to 5.00 percent by yearend.
