THE Philippines still has enough policy room to support economic growth, the Asean+3 Macroeconomic Research Office (AMRO) said on Wednesday, but stronger governance and higher-quality investments are needed to sustain the expansion.
“The picture for the Philippines economy is that it has been quite steady, but there are some headwinds against the investment side,” AMRO chief economist Dong He said during a briefing for the latest update to the Asean Regional Outlook (ARO).
The January edition showed downgrades in the country’s growth projections, to 5.2 percent for 2025 and 5.3 percent for 2026 from 5.6 percent and 5.5 percent in the October edition.
The changes, however, were already announced last November in AMRO’s annual consultation report, which also said that Philippine economic growth was steady amid global trade tensions.
Sustaining growth, the international organization said at that time, would require upgrading services and boosting private investment.
Private investment sentiment was said to be clouded by external uncertainties arising from higher US tariffs, while public investment was expected to continue being dampened by flood control project controversies.
‘Concerted effort’ needed
AMRO’s He on Wednesday again noted that public investment had been affected by the infrastructure scandal and said the government needed to strengthen governance and investor confidence to ensure sustainable and more resilient economic growth.
Public policies should focus on building resilience, especially against long-term risks such as climate change as recent floods and natural disasters had shown the vulnerability of the Philippines.
Strengthening infrastructure to better withstand natural disasters should be a key priority, He said.
In the short term, meanwhile, monetary and fiscal policy can be used to support economic growth, and He said that AMRO had a “lot of confidence” that there was sufficient policy room for both the central bank and the government.
He said that improving the overall investment environment and making sure that public spending was directed toward crucial projects would raise the economy’s capacity to withstand risks.
“I think these longer-term issues would require concerted effort to strengthen the investment environment,” He said.
“And so, as I mentioned, public and private investment needs to be stronger for the infrastructure to become more resilient and for human capacity skills to be upgraded.”
Cabinet officials have said the government will ramp up infrastructure spending this year to make up for lost economic growth following a massive corruption scandal.
Public Works Secretary Vince Dizon told a briefing last week that his department would be spending P200 billion to P250 billion in the first quarter with the aim of “not just to spend more but ... to spend more wisely and spend for the right things.”
‘Notable resilience’ for Asean+3
AMRO, meanwhile, raised its growth forecasts for the Asean+3 grouping — the 10 members of the Association of Southeast Asian Nations and trading partners China, Hong Kong Japan and Korea — to 4.3 percent for 2025 and 4.0 for 2026 from 4.1 percent and 3.8 percent in October.
It said that growth had “exceeded expectations” last year, supported by technology exports, investments in Asean, and tariff outcomes that were “less severe” than initially projected. The expected dip for 2026, meanwhile, was said to reflect expectations of weaker external demand.
“The Asean+3 region has demonstrated notable resilience, navigating global uncertainties more effectively than anticipated,” He said in a statement.
“Strong technology demand and robust FDI (foreign direct investment) inflows into emerging sectors, including advanced electronics, electric vehicles, and digital services, have helped cushion growth despite ongoing tariff headwinds,” he added.
AMRO said risks to the outlook were now more balanced but added that uncertainty remained high, primarily from unpredictable US policies, changes to demand for technology and global financial market volatility.
“While the balance of risks has improved, the external environment remains highly uncertain,” He said, adding that “in the near term, maintaining policy readiness to respond to emerging shocks is critical.”
“Over the longer term, diversifying growth drivers and deepening regional economic integration will be essential to strengthen the region’s resilience.”