BSP less optimistic about 2025, 2026 PH growth
The Bangko Sentral ng Pilipinas (BSP) estimates that growth in 2025 and 2026 will be challenged by high global commodity prices that may dampen economic activity.
MANILA, Philippines — The Philippine economy might grow slower than previously expected this year and in 2026 as high global commodity prices dampen economic activity, the Bangko Sentral ng Pilipinas (BSP) said.
In its latest monetary policy report, the BSP said growth was projected to settle “near the lower bound” of the Marcos administration’s target range for 2025 and 2026, adding that economic expansion could “moderate compared to previous assessments.”
The moderation reflects the lower-than-expected gross domestic product (GDP) growth in the fourth quarter of 2024 following the onslaught of destructive typhoons late last year that sank farm output and weighed on services.
READ: Gov’t missed 2024 GDP growth target
Ultimately, the BSP said higher global commodity prices could dampen economic activity, while tariff threats in the United States also pose great risks to domestic growth prospects.
“These headwinds are partially offset by the BSP’s monetary policy easing,” the central bank said.
Government data showed GDP had expanded at an average rate of 5.6 percent for the entire 2024, a year marked by strong typhoons and massive flooding.
While that pace of expansion was a little faster than the 5.5-percent growth in 2023, the latest reading had fallen short of the revised 6 to 6.5 percent goal of the Marcos administration, marking the second year of below-target GDP growth.
For this year until the end of President Marcos’ term in 2028, the government was targeting to make the economy grow between 6 percent and 8 percent. But some analysts believe a shallow easing cycle could hold back the economy from posting a stronger growth.At its first policy meeting for this year, the BSP had decided to keep the benchmark rate that banks typically use as a guide when pricing loans to 5.75 percent, citing the need to defend the economy and the inflation outlook against “unusual” uncertainties coming from a slew of tariff actions in the US.
READ: In surprise move, BSP keeps key rate steady
The good news is a benign inflation that eased more than expected in February could provide the central bank more room to further cut borrowing costs.
“The overall balance of demand and supply conditions translates to a neutral output gap, suggesting limited demand-driven inflationary pressures,” the central bank said.
