BMI, a unit of Fitch Solutions, kept its economic growth projection for the Philippines this year amid increasing global trade tensions.
“We recently revised our 2025 growth forecast from 6.3 percent to 5.4 percent and are opting to maintain our projection for now,” BMI said.
“While the latest growth figures pose some downside risk to our full-year forecast, we still think that the economy will achieve a growth rate slightly above 5 percent despite the backdrop of escalating trade tensions and slowing global demand. However, growth will be nowhere close to the 6.4 percent it typically manages,” it said.
BMI said increased spending from both private consumers and the government would continue to fuel the Philippine economy’s growth.
It said the private consumption staged a turnaround, recording its strongest performance in a little over a year. Its growth contribution rose from 3.6 percentage points (pp) in the fourth quarter 2024 to 3.9 pp in the first quarter.
“With inflation expected to ease to an eight-year low of 2.2 percent in 2025, this will provide some support to real incomes and, in turn, household spending,” BMI said.
The contribution from government consumption more than doubled from 1.1 percentage points in the fourth quarter of 2024 to 2.6 percentage points.
“We expect this momentum to continue into the second quarter as the mid-term elections are just around the corner. Indeed, we have penciled in a wider budget deficit of 6.2 percent of GDP in 2025, compared with 5.7 percent in 2024,” BMI said.
The economy’s 5.4 percent growth in the first quarter of 2025 reached the lower end of the government’s 6 percent to 8 percent target for the year.
Department of Budget and Management Secretary Amenah Pangandaman said the government still expects GDP to accelerate throughout the year as domestic demand strengthens and public investments are sustained.
“This is even amidst global uncertainty, as domestic growth prospects supported by improving private consumption, including government infrastructure spending, provide a buffer against external headwinds,” Pangandaman said.
“Finally, we remain optimistic that the Philippines will meet its growth target for 2025 of 6.0 to 8.0 percent, especially as the government remains strongly committed to achieving our medium-term plans and long-term vision. Given the substantial 8.2 percent YoY growth registered by the capital spending of the government—a testament to the successful implementation of public infrastructure projects—we are certain we can sustain our high growth trajectory,” she said.