PHILIPPINE economic growth likely picked up in the last three months of 2025 but remained well below the government’s target, ANZ Research said on Friday.
“We expect the Philippines’ Q4 2025 GDP (gross domestic product) data to show headline GDP growth held up at 4.5 percent y/y (year on year), implying a 1.5 percent q/q (quarter on quarter) growth,” ANZ said ahead of the release of preliminary fourth-quarter (Q4) and full-year data this coming Thursday.
GDP growth markedly slowed to 4.0 percent in July-September from 5.5 percent in the second quarter — the lowest since a 3.8-percent contraction in January-March 2021 during the pandemic — as a flood control project scandal weighed on both public and private spending.
If realized, ANZ’s “sub-potential” 4.5-percent fourth-quarter forecast would bring full-year growth to 4.9 percent, below the government’s 5.5- to 6.5-percent target for 2025.
The repercussions of the flood control project scandal have not receded, ANZ said, with public spending weakness having spread to households and businesses where confidence has fallen.
“In fact, consumer expectations on economic conditions over the next 12 months are now lower than during the pandemic,” it said, adding that the number of companies that had pursued expansion plans also declined.
“These problems are likely to reflect in the Q4 2025 GDP data.”
On the bright side, exports should have contributed more to growth, it said. ANZ noted that outbound shipments in October and November were driven primarily by electronics as artificial intelligence technology take-up rose.
Imports, meanwhile, eased during the same period.
“However, domestic activity likely slowed down further, reflected in declining car sales and consumer goods imports numbers,” ANZ said.
Government spending is also expected to have fallen anew and will likely continue weighing on growth in the first six months of 2026, it added.
Economic managers have said that 2025 GDP growth would be below target — Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. earlier this month said it could have slumped to 4.6 percent from 5.7 percent in 2024 — but expressed optimism of a rebound this year.
Remolona said growth could recover to 5.4 percent in 2026 and further improve to 6.0-6.2 percent in 2027.
The target for 2026 has been lowered to 5.0-6.0 percent and that for next year was trimmed to 5.5-6.5 percent from 6.0-7.0 percent previously.
Meanwhile, ANZ said that overall growth conditions and weak domestic demand could prompt the BSP to deliver one more 25-basis-point rate cut.
However, it questioned the effectiveness of continued monetary policy easing amid low consumer and business confidence.
It argued that “a revival in government spending is the most appropriate pathway to faster growth.”
