PH economy seen growing 6% this year

THE Philippine economy is seen to grow by 6 percent this year, which is within the government’s 5.5- to 6.5-percent target, Standard Chartered Bank economist Jonathan Koh said on Friday.

The forecast is an increase of the 5.4-percent gross domestic product (GDP) rate in the first quarter (Q1) data from the Philippine Statistics Authority.s

What would drive the 6-percent upswing are the normalization of imports and the low base effects in Q2, Koh pointed out.

He explained that net exports decreased from the Q1 GDP due to strong imports, which were factored in ahead of the election spending ban in Q2.

This could lead to a possible normalization of imports in Q2 and the succeeding periods, which could subtract less or “add back” to GDP growth, Koh said.

A “not-so-positive” factor is the unusually high government spending, which boosted Q1 GDP, he noted. However, spending is expected to be negative year on year for the remainder of 2025.

Normalizing imports and negative year-on-year fiscal spending may “cancel out” each other to some extent, said Koh.

He expects Q2 growth to be “not extremely strong” at around 5.9 percent. Nonetheless, he said the lower base from the previous year may help push the 6-percent gain.

Private consumption will remain steady but not exceptional, contributing 4 percentage points to GDP growth for the year, lower compared to its pre-Covid levels, Koh said, adding that investments may get a little boost from the expected rate cuts.

Investments

However, he also sees investments to be possibly weighed down by global uncertainties. “FDI (foreign direct investment) in the Philippines hasn’t really picked up. So, clearly, uncertainty is weighing a little bit on that as well,” Koh said.

While it’s difficult to figure out the precise financial impact of typhoons, its damages are expected to negatively affect growth and hike inflation, he opined, saying that inflationary concerns could be alleviated by sufficient rice supply and falling global rice prices.

“If I were to look at the rice supply situation, it seems to be more than adequate at the moment, thanks to the good harvest earlier in the year,” Koh noted. “Global rice prices have actually been falling. So, I’m really not too concerned about any potential spike in inflation.”

The 19-percent tariff on Philippine exports to the US will not affect GDP growth that much, with only a modest hit of 0.2 to 0.3 percentage points, Koh opined, pointing out that “80 percent of the Philippine economy is domestically driven.”