By Louella Desiderio, November 11, 2025; The Philippine Star
Manila, Philippines — The Philippine economy is expected to post below five percent growth this year, following the sharp slowdown in third quarter gross domestic product (GDP) growth, research and analysis firm BMI and United Kingdom-based think tank Pantheon Macroeconomics said in separate reports released yesterday.
“The underperformance in Q3 (third quarter) has led us to revise down our 2025 forecast to 4.9 percent,” BMI said.
Previously, BMI was expecting the economy to post 5.4 percent growth this year.
“We expect the recovery from storm season and strong remittances to drive faster growth in Q4 (fourth quarter), although tariff-related headwinds will drag on growth,” the Fitch Solutions unit said.
Pantheon Macroeconomics chief emerging Asia economist Miguel Chanco and Asia economist Meekita Gupta said that they have also downgraded their GDP growth outlook to 4.9 percent for this year from the previous forecast of 5.3 percent, citing the abysmal third quarter growth performance.
Economic growth in the third quarter collapsed to four percent, a four-year low, as government infrastructure spending contracted amid corruption issues that also dampened consumer and investor confidence.
From January to September, average economic growth was at five percent, below the government’s 5.5 to 6.5 percent growth target for the year.
Department of Economy, Planning and Development Secretary Arsenio Balisacan earlier said that it had become challenging to meet even the low end of this year’s growth target as it would require the economy to post at least 6.9 percent growth in the fourth quarter.
For next year, BMI said it is maintaining its GDP forecast at 5.2 percent.
Meanwhile, Chanco and Gupta trimmed their 2026 growth outlook to five percent from 5.4 percent, previously.
Both forecasts are lower than the government’s six to seven percent growth target for 2026.
As Finance Secretary Ralph Recto has warned that government spending could slow until the first quarter next year and the graft probe has also weakened business sentiment, BMI expects subdued government spending and investment in the coming quarters.
“The drag on government spending from the corruption probe could last beyond Q1 (first quarter) 2026, particularly if sectors other than flood control are implicated. Indeed, the Independent Commission for Infrastructure received reports of wrongdoing at some hospitals, suggesting the probe could eventually expand to the healthcare sector,” BMI said.
While it expects household consumption and remittances to pick up in the fourth quarter this year due to a weaker peso and the frontloading of transfers ahead of the US’ one percent remittance tax in 2026, BMI said this is likely to be temporary with money sent from overseas anticipated to slow down next year.
“Remittances, therefore, are likely to drag on consumption growth into 2026, diminishing the positive effects of easier monetary policy,” BMI said.
Chanco and Gupta said “the ugly Q3 GDP print and the fact that all major aspects of domestic demand were poor bring into play the prospect of the Monetary Board opting for a front-loaded 50bp (basis points) reduction at its December meeting, assuming the November CPI (consumer price index) report doesn’t rock the boat.”
At its Oct. 9 meeting, the Monetary Board cut the key policy rate by 25 basis points to 4.75 percent.
Inflation held steady at 1.7 percent in October, amid slower food price upticks. This brought average inflation in the January to October period to 1.7 percent, below the government’s two to four percent target for the year.