BAGUIO CITY – The Philippines is showing the way for the Association of Southeast Asian Nations (ASEAN) in economic build up.
Its current economic performance reflects its strong ability to weather and recover from global challenges, thanks in part to growth anchored on strong domestic demand, overseas remittances, business process outsourcing, tourism, favorable employment environment, sustained public investment and growing private investment.
ASEAN is composed of ten countries namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.
Expectations are high that the Philippines will post one of the highest growths in the ASEAN, driven by robust domestic consumption, thriving business outsourcing and increase on investment in digital services.
With Philippine Gross Domestic Product (GDP) posting a growth rate of 5.8 percent, 6.4 percent and 5.2 percent in the first, second and third quarters of 2024, respectively, it positions the economy as the fastest growing economies in the sphere of the ASEAN.
As for the first half of 2024, Philippine economy performed behind Vietnam (6.9 percent) while ahead of Malaysia (5.8 percent) and Indonesia (5.0 percent).
Consumption in the household sector is also expected to plan back to pre-pandemic growth rate, supported by strong labor market and amplified spending in infrastructure.
Despite a decline in agricultural production due to bad weather, this was more than made up by a surge in tourism, large inflows of foreign investment and a boom in the manufacturing sector, government spending and by export-oriented industries.
Economy of the Philippines is anticipated to ride gung-ho in the saddle for being briskest economies within the ASEAN, triggered largely by government investment expenditure and increase in export services.
By being able to retain its 2024 economic forecast at 6.1 percent, the Philippines is expected to be the second fastest growing economy for 2025, second to Vietnam whose economy is expected to rise by 6.2 percent.
According to the ASEAN + 3 Macroeconomic Research Office (AMRO), the Philippines economic outlook is expected to post the highest growth to further by 6.3 percent, considered the highest in the ASEAN and well ahead of Cambodia.
AMRO chief Hoe Ee Khor revealed that the Philippine economy has held up despite high inflation and high interest rates and is much less dependent on export products when compared to other ASEAN nations.
“We kept the growth forecast of 6.3 percent for 2025, that’s among the highest in the region,” Khor quipped, adding further local economy growth will sustain its upward trail over the medium term as Bangko Sentral ng Pilipinas (BSP) eases policy rate.
BSP has started to ease monetary policy and BSP Governor Eli M. Remolina Jr. has announced that there is room for them to continue easing. The real interest rates are still pretty high,” Khor explained.
BSP will likely reduce policy rate to 5 percent in the third quarter of 2025 while cautiously navigating external risk like volatility of the Philippine peso. BSP has adopted a cautious approach to monetary policy, recently lowering interest rates to support economic recovery.
Many economic experts point out that one among the Philippines’ strengths lie in services exports, including information technology and BPO services which provide a buffer against global trade uncertainties and tariff risks.
These experts note that services exports and overseas remittance remain key economic pillars that will continue to contribute to economic resiliency and stability, while monetary and fiscal policies are aligned to support growth while managing risks.
In particular, the Asian Development Bank (ADB) predicts Philippines Gross Domestic Product (GDP) for this year will level at 6 percent, unchanged from the same forecast ADB provided last year. If realized, it makes the Philippines the fastest growing economy along with Vietnam.
Compared with other ASEAN countries, Indonesia will post GDP growth of 5 percent; Malaysia, 4.5 percent; Thailand, 2.6 percent, and Singapore; 2.4 percent.
On the other hand, the International Monetary Fund in its latest World Economic Outlook Report predicts the Philippines may hit the ground running to become the second fastest growing economy across Asia should its GDP hit the 6 percent mark, considering that for the whole of ASEAN, forecast stands at 4.5 to 4.6 percent.
Philippine rebound is pegged at 6.2 percent for 2025, second only to non- ASEAN country India, and such being on the back of stronger demand for consumption, increase in both public and private investments and export recovery, IMF explained.
Many critics, particularly diehards of past Philippine President Rodrigo Duterte, are not at all convinced that the present dispensation has been able to achieve an economic milestone under the leadership of President Ferdinand Marcos, Jr.
But numbers do not lie. When Bongbong Marcos became President, one of the first issues he urgently tackled was the economy and set out ambitious economic goals to the ones laid out by his predecessor, Duterte. These goals included poverty reduction.
Marcos then set his sights on achieving 6.5 to 7.5 percent Gross Domestic Product. While GDP did not go to expected 6.5 percent, the 6.3 forecast by different international economic experts studying the Philippine economy predicate it’s already an achievement for the nation.
International experts give Philippine growth assumptions a wider band of 6 to 8 percent for 2025 to 2028, underpinned by transformative structural reforms and resilience to navigate evolving domestic and global challenges.
In the case of earnings, revenue collection expectation for last year rose to 4.42 trillion pesos, surpassing the 4.27 trillion pesos target. As a percentage of GDP, the emerging revenues climbed to 16.7 percent, the highest in the last 27 years since 1997.
Recently, the Philippines world credit rating position received a shot in the arm when it was upgraded to positive by S&P Global Ratings, a world credit rating agency that issues credit ratings for the debt of public and private companies and public borrowers such as governments, governmental agencies and cities.
S&P elevated the Philippines credit position, citing the nation’s efficient policies, fiscal reforms, and improved infrastructure that have aided in helping keep economic expansion vigorous.
Such rating upgrades offer benefits like having wider access to cheaper and more cost-effective borrowing costs for the government and private sectors, helping lower borrowing costs and making the country more attractive to possible foreign investors.
The latest credit rating has made possible for the Philippines to maintain high investment grade status across all major regional and international debt-rating agencies.
Finance Secretary Ralph Recto noted that S&P’s upgrade of the Philippines credit position is an endorsement of President Ferdinand Marcos Jr.’s leadership as well as the government’s sound, economic and fiscal policies.
“It reaffirms our stable economic and political environment and that we are on track to achieve a growth enhancing fiscal consolidation. We have a comprehensive initiative to ensure that we secure more upgrades soon,” Recto said.
In a statement, S&P explained it believed the Philippines having strengthened institutional settings which contributed to significant enhancement in the sovereign credit and demonstrated by strong economic recovery in the last two years and ongoing reforms to support business and investing conditions.
Economic experts see the Philippine economy back on growth trajectory, as evidenced by rapid recovery in real per capita income and strong macroeconomic fundamentals even as economic risks and headwinds continue to persist.
However, these experts are prone to believe that by continuing to build up financial resilience, diversifying income and investment and promoting innovation and efficiency, individuals and businesses can effectively mitigate risks and navigate challenges.
The government also needs to continue focusing on sound fiscal and monetary policies, disaster preparedness and long-term investment in infrastructure and human capital. With appropriate policy responses, continued investment in infrastructure, education and climate resilience, experts think the Philippines has the potential to surpass pre-pandemic growth trajectory.
For the Philippines to exceed pre-pandemic growth rate, a multiphase strategy that spans the short, medium and long term is necessary. In the short term, further stimulating investment through targeted fiscal measures, digitalization and infrastructure projects will be the key.
In the medium term, regional development, workforce upskilling and improved investment climate will help sustain momentum while long term is transitioning to advanced industries, innovation-driven growth and green development to ensure the country remains competitive.
Likewise, there is a need for coordinated effort from all sectors to ensure the Philippines can sustain growth amid global and domestic uncertainties towards achieving upper middle income status.
