PHL may hit low end of growth target this year

THE PHILIPPINE ECONOMY will likely hit the low end of the government’s 6-8% growth target this year, Capital Economics said.

“Our forecast is that growth will remain relatively strong as looser monetary policy helps offset the drag from weaker exports and tighter fiscal policy. Overall, we expect the economy to grow by 6% this year,” it said in a report.

Capital Economics expects Philippine gross domestic product (GDP) to grow by 6% this year and by 6.5% next year. These are both within the government’s 6-8% targets for 2025 to 2026.

In 2024, GDP expanded by 5.6%, falling short of the government’s 6-6.5% target.

“Strong and steady growth supports our view that the easing cycle will remain gradual over the coming months,” Capital Economics said.

It expects the Bangko Sentral ng Pilipinas (BSP) to deliver a total of 100 basis points (bps) worth of rate cuts this year.

BSP Governor Eli M. Remolona, Jr. has signaled the possibility of lowering rates by a total of 50 bps this year, citing that 75 bps or 100 bps may be a bit “too much.”

Meanwhile, Capital Economics said inflationary pressures have “eased significantly” and will likely continue to remain within target in the coming months.

It expects headline inflation to settle at 3.2% this year and ease further to 2.9% in 2026.   

“A combination of easing food price inflation and lower transport price inflation should keep inflation contained over the coming months,” Capital Economics added. — L.M.J.C. Jocson