Moody’s Analytics says 5% PHL GDP target ‘more manageable’

A 5% economic growth target for the Philippines in 2025 will be more realistic, Moody’s Analytics said, with the fourth-quarter performance unlikely to push full-year growth to the 5.5% to 6.5% target.

“A growth rate of around 5% will be more manageable for the country,” Moody’s Analytics Assistant Director and Economist Sarah Tan said.

In the first nine months, gross domestic product (GDP) averaged 5%, pulled down by weak public spending, consumption and investment in the third quarter.

The Development Budget Coordination Committee (DBCC) will review its macroeconomic assumptions and targets next week.

The DBCC first revised its targets in June, trimming its 2025 growth forecast to 5.5–6.5% and the 2026 outlook to 6–7%, citing “heightened global uncertainties” from the Middle East conflict and US tariffs.

Ms. Tan said fourth‑quarter GDP is likely to come in at 5.2%, which if borne out would represent a slowdown from the 5.3% posted a year earlier. It would also be well below the 6.9% needed to hit the 2025 target.

Asked if holiday spending will lift consumption, she said she is now “cautiously optimistic” after the weak third‑quarter performance.

She added the holiday boost may be overshadowed by weak government spending and still‑soft investment appetite.

Economy Secretary Arsenio M. Balisacan has said that he is counting on private spending to rebound on expectations of increased consumption and remittances during the holidays.

Meanwhile, Ms. Tan said one intervention that could boost the economy is rebuilding public trust by speeding up aid disbursement to calamity‑hit communities.

“Perhaps speeding up public spending would then be a positive signal to both investors and consumers that things are moving again,” she said, while adding transparency and accountability may help restore confidence. 

Source: Business World

Asia – except PH – outpaces expectations in Q3

Philippines lone outlier as corruption probe, storms slowed growth; outlook cut

Asian economies exceeded growth expectations in the third quarter, with the Philippines emerging as the lone outlier as it lagged a regional upswing that has spurred outlook upgrades across its neighbors despite headwinds from higher US tariffs.

In a commentary, Khoon Goh, head of Asia Research at ANZ, said Asia’s economic expansion this year has been much better than expected, driven by front-loading of exports during the US tariff pause and higher spending on investments related to artificial intelligence.

For instance, third quarter growth in Taiwan, Vietnam and Malaysia beat consensus estimates by 1 percentage point or more, triggering upward revisions to growth projections for these economies.

Goh, however, said the consumption-reliant Philippines was the only economy to have surprised on the downside, prompting ANZ to slash its 2025 growth forecast on the country to 4.9 percent, from 5.4 percent previously.

The outlook for next year was also trimmed to 5 percent, from 5.2 percent earlier.

Zooming out, Goh said the more export-oriented economies have clearly performed better than the domestic-focused ones this year despite the global trade headwinds.

“Based on national accounts data for the third quarter reported so far, all economies apart from the Philippines have exceeded expectations,” he said.

Already, Economic Planning Secretary Arsenio Balisacan conceded that reaching even the low end of the government’s 5.5- to 6.5-percent growth target for 2025 has become “very challenging” after the economy expanded at a four-year low of 4 percent last quarter.

Figures showed state spending grew by 5.8 percent in the third quarter, the slowest pace since the same period in 2024, after the deepening corruption probe delayed public works as authorities grew more cautious in awarding contracts.

A notable weakness was also seen in consumer spending, which historically accounts for roughly 70 percent of total output.

Despite tame inflation and declining interest rates that could have bolstered households’ purchasing power, this key segment grew just 4.1 percent—a four-year low—after a series of powerful storms disrupted the local job market.

That said, there’s growing expectation now of a deeper rate-cutting cycle, with economists expecting additional easing moves from the Bangko Sentral ng Pilipinas in 2026.

But elsewhere in the region, ANZ’s Goh said Asia’s growth was likely to close 2025 on a strong note even as the export front-loading activity has ended.

“This will provide a solid base for 2026, especially with overall financial conditions in the region remaining very supportive,” he said. “As a result, the monetary policy easing cycle for Asian central banks will be coming to an end soon.”

Source: Inquirer

BPI sees Philippine economy growing at 5% level

Bank of the Philippine Islands (BPI) expects the economy to return to 5% growth next year, calling the third-quarter reading of 4% an anomaly and arguing that the government could eventually get a handle on the issues holding spending back.

“Next year, I think the economy should still grow about 5%. I think the Q3 number might be a one-off. It might spill a little bit to Q4 as the government tries to understand its spending. But I think as we roll into next year, we should hopefully get back to the 5% handle,” BPI President and Chief Executive Officer Teodoro K. Limcaoco told reporters.

Growth of 5% would be lower than the government’s official 6-7% gross domestic product (GDP) growth target for 2026.

Mr. Limcaoco said the third-quarter GDP reading was the result of the government having to rein in spending as it grappled with corruption in public works, particularly flood control projects.

“I guess it’s a little bit disappointing but not quite unexpected. I think the magnitude of the drop was a little surprising to everyone. But we (thought) that Q3 GDP would be slightly lower. We realized that with the current concerns about flood control, that government spending had been, I guess, reduced as they try to get things in order,” he said.

He added that bad weather dampened consumer spending during the period.

“Anecdotally, we’re hearing from our retail clients that September was a pretty weak month, primarily because of the weather,” Mr. Limcaoco said.

GDP grew 4% in the three months to September, the weakest in over four years and well below the 5.5% expansion in the second quarter and the 5.2% clip from a year earlier.

In the first nine months, GDP averaged 5%, well behind the pace of the government’s 5.5%-6.5% full-year target.

Mr. Limcaoco said the muted third quarter growth reading, paired with controlled inflation, points to a rate cut by the Bangko Sentral ng Pilipinas (BSP) in December.

However, he noted the central bank still needs to weigh how the Federal Reserve’s own easing cycle affects the peso.

“Obviously, some economists are saying that with the 4% Q3 growth, that there’s room for the BSP to cut. I think the BSP will have to take a look also at what the Fed is doing because they’ve got to watch out. Otherwise, there (could be an impact on) the currency,” he said.

The BSP last month reduced benchmark rates by 25 bps for a fourth straight meeting, bringing the policy rate to 4.75%. Since starting its easing cycle in August last year, the Monetary Board has cut rates by a total of 175 bps.

BSP Governor Eli M. Remolona, Jr. has said that another cut is possible at the central bank’s Dec. 11 meeting and further into next year amid a softening growth outlook.

Source: Business World