The Philippine economy is expected to expand by 6 percent annually in 2025 and 2026, positioning it among Asia’s fastest-growing economies, Moody’s Ratings said Wednesday.
Moody’s, in its latest banking system outlook, cited the country’s robust economic performance and solid bank fundamentals as underpinning its stable outlook for the sector this year.
“We forecast the Philippines’ real GDP to grow by 6.0 percent in 2025 and 2026, as one of the fastest growing economies in Asia,” Moody’s Ratings said.
Moody’s maintains a credit rating of Baa2, with a stable outlook, for the Philippines. Baa2 is an investment-grade rating, with some speculative elements and moderate credit risk.
The ratings agency expects Philippine inflation to remain within the government’s 2 percent to 4 percent target range, allowing for further policy rate cuts this year.
This, it said, would bolster domestic consumption and investment, further stimulating the economy.
Moody’s also said that potential higher U.S. tariffs under a Trump administration would have a limited impact on the Philippines.
“Given the country’s consumption-led economic model, we expect the impact of higher tariffs on the Philippines under the Trump administration to be muted compared to its regional peers,” it said.
The agency said strong economic growth, stable inflation, and further rate cuts would drive credit demand and support loan quality.
Moody’s maintained its stable outlook for the Philippine banking system.
“Outlook remains stable as strong economic growth and lower interest rates limit asset quality risks and drive credit demand,” it said.
Moody’s forecasts overall asset quality to remain steady, with capitalization remaining strong.
Bank profitability is also expected to be broadly stable this year, and funding and liquidity conditions are projected to remain solid.
The probability of government support for the banking sector remains high, Moody’s said.
“We expect the government to prioritize systemic stability and provide support for rated banks in times of need,” it said.