A series of interest rate cuts by the Bangko Sentral ng Pilipinas will help the Philippine economy grow faster in 2025, after achieving a slower-than-expected 5.6-percent expansion in 2024, Oxford Economics said Thursday.
“We expect the growth will pick up in 2025, supported by more accommodative monetary policy and anticipated well-contained inflation. Nevertheless, uncertainty around US tariff policies, tighter than expected financial conditions and increased geopolitical risks present some downside risks to growth,” the London-based economic advisory firm said.
The Philippine Statistics Authority (PSA) reported that the gross domestic product grew by 5.2 percent year-on-year in the fourth quarter, resulting in a full-year growth of 5.6 percent. Persistent weakness in goods exports and extreme weather conditions continued weighing on growth in the fourth quarter, according to Oxford Economics.
It fell short of the government’s 2024 growth target of 6 percent to 6.5 percent for 2024.
The 2024 growth still placed the Philippines as the third fastest-growing economy among neighboring Asian countries that released their fourth-quarter figures. The Philippines trails Vietnam (7.5 percent) and China (5.4 percent), but outpaced Malaysia (4.8 percent).
Oxford Economics expects economic growth to gain some momentum in 2025. “With more accommodative monetary policy, we expect three 25 basis point rate cuts in the first three quarters and likely well-contained inflation, consumer spending and investment are both likely to strengthen,” it said.
The government’s Development Budget Coordination Committee (DBCC) set an annual growth target of 6 percent to 8 percent for 2025 to 2028.
Data showed that the growth of household consumption eased to 4.7 percent in the fourth quarter from 5.2 percent in the third quarter.
Investment also ended 2024 on a weak note, with growth in fourth quarter slowing to 4.8 percent from 7.6 percent the third quarter.
Government spending surged to 9.7 percent the fourth quarter, picking up from 5 percent in the third quarter.
Exports rose 3.2 percent in the fourth quarter, rebounding from a 1.4-percent contraction in the third quarter. This growth was driven by fast expansion in services exports (up 13.5 percent), offsetting the loss (-4.6 percent) vin goods exports.
Electronic products, accounting for more than 60 percent of total manufacturing goods exports, fell 11 percent in the fourth quarter, marking the third consecutive quarter of contraction.