PH growth seen slowing to 2026

Philippine economic growth could fall well below target this year and keep slowing in the next two years, a United Kingdom-based research consultancy said, primarily due to likely constraints to consumption.

Pantheon Macroeconomics, in an outlook for emerging Asian economies for the first half of 2025, said the country's gross domestic product (GDP) growth was likely to average 5.4 percent in 2024, down from 5.5 percent a year earlier and the lowest since 2020's 9.5-percent plunge.

That contraction was due to the impact of the Covid-19 pandemic and Pantheon said that efforts to reduce the debt burden incurred to prop up the economy, along with high interest rates, would weigh on government and private sector spending.

"Domestic-demand driven India and the Philippines will remain hampered by incomplete post-Covid fiscal consolidation and historically-tight monetary policy," the consultancy said.

"Surveys show that a slowing rebuild of household savings in the Philippines and cost-of-living crisis damage cushioned the slump in consumption growth this year, albeit at the likely expense of delaying a real recovery in GDP growth this year," it also said.

Both India and the Philippines, along with Indonesia, are among the emerging Asian economies expected to post growth slowdowns, but the rest — Thailand, Vietnam, Singapore, Malaysia and Taiwan — were forecast to perform better than last year.

While the Philippines will see growth ease, the expansion will still be among the highest in the group, next only to India's 67.8 percent and Vietnam's 6.7 percent.

Improvements, however, are not expected for the following two years with GDP growth forecast to slow further to 5.2 percent in 2025 and 4.8 percent in 2026.

All three forecasts fall below the government's recently-revised 6.0-6.5 percent and 6.0-8.0 percent targets for this year and 2025-2028, respectively.

On a bright note, Pantheon said the Philippines, India and Indonesia, given their domestic demand-driven economies, offered "potential refuge" should a trade war erupt if US President-elect Donald Trump pushes through with threats to raise tariffs on all US imports.

The country's growth was a lower-than-expected 5.2 percent in the third quarter as a series of storms affected agriculture output and government infrastructure projects. Year to date, the expansion remains below target at 5.8 percent.

Many observers have lowered their 2024 forecasts for the Philippines, including the World Bank that this week trimmed its outlook for the year to 5.9 percent from 6.0 percent and the Asean+3 Macroeconomic Research Office, which earlier this month lowered its 2024 projection to 5.8 percent from 6.1 percent.

An exception would be the Asian Development Bank, which on Wednesday said that it still expected the country to grow by a within-target 6.0 percent this year.

Pantheon Macroeconomics said the Bangko Sentral ng Pilipinas would continue to ease policy given the growth pressures, with the target reverse repurchase rate likely to fall to 4.75 percent by the end of 2025.

The central bank's benchmark rate currently stands at 6.0 percent following the two 25-basis-point cuts by the policymaking Monetary Board in August and September.

Pantheon expects monetary authorities to implement another 25-bps cut during their final policy meeting for the year on Dec. 19.

Source: Manila Times

Most Filipinos expect inflation to continue to rise

Most Fiipinos see inflation rising over the next year and do not expect the pace of price increases to normalize anytime soon, according to a survey by Ipsos.

In its latest Cost of Living Monitor, Ipsos found that 80% of Filipinos see the rate of inflation to rise in the next year.

“While economists point out that inflation — and interest rates — have fallen in many countries, you might assume that consumers should be feeling more positive by now about their own financial situation and more optimistic about where their country’s economy is headed in 2025,” Ipsos Chief Executive Officer Ben Page said.

“In fact, they are the opposite. The legacy of high inflation over the past few years is that an expectation of price rises is now hard-wired into the public consciousness,” he added.

The Philippines’ outcome is also much higher than the 65% overall average across 32 countries.

“This is something that is felt across the board. In 21 of the 32 countries surveyed people are more likely to think prices will rise at a faster rate than they did earlier this year,” Ipsos said.

Most Filipinos think that inflation has yet to normalize, the survey showed, with 28% expecting inflation to never return to normal. On the other hand, 27% see prices normalizing after next year, within the next year (26%), within the next six months (5%), and within the next three months (7%).

Only 6% of respondents said that inflation had already normalized.

Inflation quickened to 2.5% in November from 2.3% in October as food prices rose after a series of typhoons hit the country. In the 11-month period, headline inflation averaged 3.2%.

This year so far, inflation has settled within the 2-4% range, except for the 4.4% spike in July.

The central bank expects inflation to settle at 3.1% this year, 3.2% in 2025 and 3.4% in 2026. However, the Bangko Sentral ng Pilipinas (BSP) has said that the risks to the inflation outlook for next year until 2026 have shifted to the upside.

“While inflation rates are going down, people are not feeling it in the way policy makers and central banks would have hoped,” Ipsos said. “People expect price rises across all areas of spending, from utilities to food.”

Globally, 70% of respondents attribute the state of the global economy as the biggest contributor to the rising cost of living. This is followed by government policies (69%), interest rates (66%), businesses making excessive profits (62%) and the Russia-Ukraine war (58%).

Meanwhile, 75% of Filipinos expect interest rates to rise over the next year.

The BSP began its easing cycle in August this year, delivering a total of 50 basis points (bps) worth of rate cuts so far. This brought the benchmark to 6%.

The Monetary Board could deliver another 25-bp cut at its final policy review of the year on Dec. 19.

“There is often a time lag between inflation rates subsiding and consumer confidence returning. But this time things feel rather different. What we are now seeing in many countries is a rise in the number of people who say they are financially struggling,” according to Ipsos.

The survey also showed that 10% of Filipinos expect their own standard of living to fall over the next 12 months.

In terms of financial management, only 37% of Filipinos are “doing alright.” This is compared to the respondents that said they are “just about getting by” (26%), “finding it quite difficult” (20%), “finding it very difficult” (9%), and “living comfortably” (9%).

Meanwhile, 48% of Filipinos see the economy as being currently in a recession, as far as they are aware. On the other hand, 28% say the opposite while 23% do not know.

TAX CUTS

“Across 32 countries people say they prefer tax cuts even if it means less money for public services, over spending more and paying greater taxes,” Ipsos said.

“However, this masks big differences across countries. Türkiye, Romania and the Philippines back tax cuts, while Indonesia and Sweden want better public services.”

The survey found more than half (52%) of Filipinos prefer that their personal taxes be cut even if it means there will be less government spending on public services.

The survey also found 70% of Filipinos expect the taxes that they pay to rise over the next year.

The Department of Finance  has said it does not plan to introduce new taxes this year and potentially until the end of the Marcos administration, apart from those already pending in Congress.

The department’s priority tax measures include the value-added tax on digital service providers, excise taxes on single-use plastics and pickup trucks, the rationalization of the mining fiscal regime, and the motor vehicle road user’s charge, among others.

Source: Business World

Trump 2.0 seen as a win for Philippines real estate

The country’s real estate industry is expected to benefit and flourish further under a Donald Trump presidency, according to integrated real estate services company Santos Knight Frank.

In a press briefing, Santos Knight Frank chairman and CEO Rick Santos said that Trump’s win would benefit the Philippine real estate sector.

“President Trump is a businessman. He’s a real estate guy, so we think that will be positive,” Santos said.

“He’s very much into real estate. So I couldn’t think of a better person to help the Philippine real estate sector and business of the Philippines than probably one of the most high-profile real estate individuals and personalities anywhere,” he said.

At present, Santos said the Philippine real estate sector is riding on a wave of opportunities driven by proactive measures from the current administration to open the country further to investments.

He said that the Marcos administration’s CREATE MORE Act, in particular, promotes investment-friendly policies designed to stimulate business growth and demand for real estate.

“These efforts are creating a more dynamic and business-friendly environment, paving the way for sustained development and progress,” Santos said.

“Momentum in the market remains strong, particularly in the residential segment, where Manila has once again secured the top spot in Knight Frank’s Prime Global Cities Index. Demand continues to drive price growth in this sector, fueled by limited supply,” he said.

He said a Trump presidency would be a win for the Philippines, with potentially limited downside.

“There’s always good. There’s always bad. But I’m very optimistic,” he said.

According to Santos, Philippine-US relations will be positive for strategic and business purposes.

He said that Trump’s global trade policies, combined with the recently signed CREATE MORE law, will significantly influence the country’s industrial and manufacturing sectors.

“From a strategic level, the Trump administration and the people he has appointed are taking a strong stance to support the treaty ally and the long US-Philippine relationship. That’s going to be positive for the Philippines from a strategic, defense, trading and business perspective,” Santos said.

“We think the Trump administration will continue to be good for Philippine business. Also, from a US-Philippine perspective, we have never seen US-Philippine relations so good, so strong, so important and so relevant,” he said.

Source: Philstar