The United Nations predicts sustained growth for the Philippines in the coming years, driven by domestic demand, investments, and a vibrant services sector. While risks remain, the report highlights the country's resilience and potential for long-term development.
The Philippines is poised to remain one of Asia's strongest economic performers, the United Nations said in a report, with growth projected to hit official targets for this year and the next. Gross domestic product (GDP) growth is expected to hit 6.1 percent in 2025 and 6.2 percent in 2026 — within the 6.0- to 8.0-percent target for this year to 2028, the UN said in its World Economic Situation and Prospects 2025 report.
'The anticipated sustained growth reflects robust domestic demand, ongoing public investments, and the positive effects of recent investment policy reforms, along with a vibrant labor market and a growing services sector,' said Zhenqian Huang of the UN Department of Economic and Social Affairs. 'Monetary easing amid lower inflation will support domestic demand in the near term. Robust remittance inflows will bolster household income and expenditures,' Huang added.Growth was 5.5 percent in 2023, below target and slumping from the prior year's better-than-expected 7.6 percent. The UN expects the Philippines to have missed the 2024 goal of 6.0-6.5 percent and Huang said full-year growth was likely to have only marginally improved to 5.6 percent. Preliminary 2024 growth data will be released by the Philippine Statistics Authority on Jan. 30.Still, Huang said that 'despite ongoing fiscal consolidation, improved government revenue collection over the past decade has enabled sustained public spending on essential infrastructure to unlock long-term potential.''Additionally, the global demand for AI-related electronic products is expected to boost merchandise trade, while services trade will benefit from the ongoing recovery in international tourism,' she added.Significant downside risks persist, however, and Huang said that rising trade tensions and the possibility of higher tariffs could undermine the performance of merchandise trade. She also said that current account deficits since the Covid-19 pandemic had left the economy vulnerable to exchange rate volatility, particularly if major central banks implement unexpected monetary policy shifts. Potential higher tariffs from trading partners, disruptions to supply chains and trade routes, and climate-related disasters could reignite upward pressure on prices. 'Additionally, the Philippines is highly vulnerable to climate change, with more frequent and unpredictable natural disasters potentially leading to significant economic and social losses,' Huang continued.Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. has said that US protectionism would pose a challenge to consumer prices but claimed that the country was 'in better shape' given that likely tariff hikes would target merchandise, rather than service, exports
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