PHILIPPINE growth forecasts could again be lowered following a worse-than-expected slowdown last year, with analysts pointing to the continued impact of a massive corruption scandal.
Gross domestic product (GDP) growth slumped to 4.4 percent in 2025 from 5.7 percent in 2024, the government reported on Thursday, with slowdown in the last three months of the year worsening to 3.0 percent from 3.9 percent in the third quarter.
Full-year growth was well below the government’s 5.5- to 6.-5 percent target and the 2025 result market the third year in a row that growth goals were not met.
“Growth is likely to remain weak until governance-related issues are resolved and public spending begins to improve,” ANZ Research said.
“While support from net exports will likely be sustained over the next few months due to the AI-related technology cycle, its overall impact will be limited,” it added.
Pantheon Macroeconomics said that with the fourth-quarter result was much weaker than expected, it was likely to downgrade an already below-consensus 5.0 percent economic growth forecast for 2026.
“All this weakness looks set to bleed into the early part of this year, as we’ve yet to see any bottoming-out in government infrastructure spending in the monthly numbers, while surveyed expansion plans in the private sector continue to roll over sharply,” it said.
Economic managers have trimmed the 2026 growth target to 5.5-6.5 percent this year, down from 6.0-7.0 percent, due to the lingering impact of the corruption scandal on spending and sentiment and external uncertainties.
Pantheon also said the below-potential growth had raised the case for the Bangko Sentral ng Pilipinas (BSP) to cut key interest rates by another quarter-point next month.
“[W]e now see an outside chance of an even larger 50bp move,” it added.
The BSP’s policymaking Monetary Board has cut interest rates by 200 basis points since August 2024, the last a 25-basis point reduction in December that brought the policy rate to 4.5 percent.
Earlier this month, BSP Governor Eli Remolona Jr. said another rate cut could be ordered if economic growth slowed further than expected. His estimate for 2025 was a slowdown to 4.6 percent.
