THE Philippines stands poised for higher growth in 2025 amid further policy rate cuts by the Bangko Sentral ng Pilipinas (BSP), the research unit of Metropolitan Bank & Trust Co. (Metrobank) said.
“The Philippines continues to be one of Asean leading economies in terms of growth in 2024, performing above the global average despite significant headwinds,” Metrobank Research said in a 2025 outlook.
It expects gross domestic product (GDP) to grow by 6.2 percent in both 2025 and 2026, “as consumption and investment spending receive a boost from the monetary easing of the Bangko Sentral ng Pilipinas.”
The forecast, which falls within the government’s recently revised 6.0- to 8.0-percent goal for 2025 to 2028, is an improvement from an expected below-target result for 2024.
GDP growth as of the third quarter of last year was 5.8 percent, below the official target of 6.0-6.5 percent.
The slowdown has been cited as one of the reasons why the BSP has continued to lower interest rates as this could spur consumption and thus economic growth.
The BSP’s policymaking body Monetary Board cut rates by a total of 75 basis points (bps) last year, bringing the central bank’s benchmark rate to 5.75 percent.
“With the BSP’s monetary easing cycle in full swing, we could expect more rate cuts in 2025,” Metrobank Research said.
Higher inflation could prompt a pause, however, but slow economic growth will again warrant a cut, it added.
BSP Governor Eli Remolona Jr. has noted upside risks to inflation and indicated that monetary authorities could slow down the pace of easing this year.
Analysts earlier forecast cuts totaling 100 basis points in 2025, but Remolona last month said that this could be too much.
The BSP, Metrobank Research said in its outlook, could implement three 25-bp rate cuts this year.
Monetary authorities expect inflation to remain within the 2.0- to 4.0-percent target, but the risk-adjusted forecast for next year was adjusted to 3.4 percent from 3.3 percent while that for 2026 was kept at 3.7 percent.
The baseline forecasts for 2025 and 2026, meanwhile, were respectively raised to 3.3 percent and 3.5 percent from 3.2 percent and 3.4 percent, respectively.
“The BSP’s primary mandate is price stability, but it also considers economic growth if inflation goals are realized,” Metrobank Research noted.
“In 2025, it needs to carefully consider the upside risks that could sway the US Fed’s (Federal Reserve) policies and the weakening of the peso,” it added.
“Nonetheless, as long as inflation remains stable despite risks, and as growth starts to pick up, the BSP is likely to continue cutting rates to foster growth and household expenditure.”
Be the first to comment