1 month ago
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Following the Philippines' disappointing economic performance in 2024, hitting even the lower end of the government’s six-to-eight percent growth target this year could be challenging, according to a state-owned socioeconomic policy think tank.
“Nevertheless, PIDS remains optimistic, projecting a 6.1 percent year-on-year GDP [gross domestic product] growth for 2025,” said Aniceto C. Orbeta Jr., president of the Philippine Institute for Development Studies (PIDS).
“This outlook is supported by rising household consumption, improved employment conditions, stable remittance inflows, and increased election-related spending,” Orbeta explained.
Meanwhile, PIDS senior research fellow John Paolo Rivera said achieving the think tank’s 6.1-percent growth rate forecast could be challenging for the Marcos administration.
“Given the ‘disappointing’ quarter-four and full-year 2024 GDP growth, achieving a 6.1 percent growth rate in 2025 is now more challenging,” Rivera said, but argued that it remains “possible with the right policy interventions and external conditions aligning favorably.”
Election-fueled hope
Angelo Taningco, chief economist at Security Bank Corp., asserted that the local economy would accelerate at a faster rate this year primarily because of midterm elections.
“Of course, a presidential election year provides stronger GDP growth than a midterm election year, but still, this bodes well for demand,” Taningco said, noting that most of the time growth during an election year is faster than that of the year before the election.
To recall, the GDP expanded by 5.6 percent in 2024, falling short of the government’s revised target of 6.0-6.5 percent rate. Taningco said that his own growth forecast for this year is close to the lower bound of the target at around 6.1 percent too.
“If the magnitude of election spending is stronger than anticipated—boosted by low inflation, rate cuts, and other factors—then we could see a greater upside in GDP growth this year compared to last,” Taningco said.
He noted that while concerns over a potential trade war and sluggish growth in manufacturing persist, hitting the goal remains feasible.
“However, hitting the upper range of the government’s 6-8% target would require stronger momentum in key sectors and improved domestic and global conditions,” Rivera said.
That said, Rivera suggested that the Philippines “must accelerate reforms, manage inflation, and attract more investments to hit the upper end of the government’s growth target.”
Among the major strategies cited is the diversification of the country’s economic activities with its trading partners. “It would also strengthen internal economic constraints in the Philippines.”
Moreover, he noted that if the government has a firm commitment to hitting the target, reforms can be fast-tracked, inflation would remain subdued, and the Philippines could “project itself as an investment destination for both local and foreign investors.”
“So it all comes down to policy. Our policymakers have a lot of work to do to achieve that goal,” he concluded.
