Phl economy expected to accelerate above 6% in 2025

The Philippine economy is projected to grow between 6 and 6.25 percent in 2025, driven by improved interest rates, increased consumer spending, and stronger government expenditure, according to Michael Gerard Enriquez, president of Sun Life Investment Management and Trust Corporation (SLIMTC).

Enriquez shared his outlook in an interview with the Philippine News Agency, noting that better economic conditions and reduced uncertainties will support growth. 

However, he revised the 2024 growth forecast to 5.6 percent, slightly below the government’s initial target range of 6 to 7 percent.

The country’s GDP expanded by 5.2 percent in the third quarter of 2024, bringing the year-to-date average growth to 5.8 percent. With expectations of further interest rate cuts, both locally and in the US, Enriquez believes this will help fuel domestic spending.

He anticipates the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve will each lower key rates by 100 basis points next year, with the Fed likely being more aggressive. 

Currently, the BSP’s reverse repurchase rate stands at 6 percent, with the central bank already reducing its key rates by 50 basis points in 2024. BSP Governor Eli Remolona has indicated a willingness to further cut rates in the final quarter.

The expected rate cuts are seen as a positive for SLIMTC’s investment activities, as lower rates tend to drive investors toward riskier assets, such as stocks. 

Enriquez highlighted the firm’s growth in assets under management (AUM) since its inception in 2021, despite challenges posed by higher interest rates and economic uncertainties, including those surrounding the US elections.

He also pointed out that inflation is expected to ease, with the latest data showing an inflation rate of 2.3 percent in October, up from 1.9 percent in September, due to rising food prices. 

However, inflation remains within the central bank’s 2 to 4 percent target, and with a less volatile global environment, Enriquez sees improved economic performance in 2025.