MANILA, Philippines — S&P Global Ratings has trimmed its growth forecast for the Philippines to 5.6 percent this year from its earlier 5.9 percent estimate, citing subdued private consumption and investment alongside persistent global uncertainties.
The downgrade reflects weaker-than-expected momentum in the first half, when Philippine gross domestic product (GDP) grew by 5.4 percent. This was faster than many economies in Asia, but still below trend and short of expectations.
“Private consumption growth, investment and household confidence are still relatively subdued,” S&P economist Vince Conti told The STAR.
“We expect that both global and domestic uncertainty would continue to weigh on investment growth in the near term,” Conti said.
S&P’s latest projections show the country’s GDP growth will hit the government’s 5.5 to 6.5 percent target for 2025.
The credit watcher also sees growth picking up to 5.8 percent in 2026, though this remains below the government’s more ambitious six to seven percent goal for next year.
Conti noted, however, that the country’s reliance on external demand comes more from services rather than goods trade, which provides a degree of resilience against heightened global trade frictions.
“This will partially mitigate the impact of the elevated trade tensions,” he said. “On the positive side, with inflation low and likely to remain under control in the next few years, the Bangko Sentral ng Pilipinas (BSP) has room to continue its easing path to support growth.”
S&P expects Philippine inflation to average 1.8 percent in 2025, sharply down from 3.2 percent last year, before rising moderately to three percent in 2026 and 3.3 percent in 2027.
The credit watcher is penciling in around 100 basis points of further policy rate cuts by the BSP between now and end-2026, which could help shore up domestic activity.
S&P projects the BSP’s key rate, which is currently at five percent, to ease to 4.75 percent in 2025 and further to four percent by 2026, a level it expects to hold through 2028.
Meanwhile, the report highlighted that across Asia-Pacific, economic growth will broadly ease in 2025 as the higher import tariffs imposed by the United States, slower global trade and China’s deceleration weigh on the region.
S&P cut its regional growth forecast to 4.4 percent in 2025 from 4.5 percent previously, with most economies projected to expand at a slower pace than last year.
Still, the credit rater emphasized that resilient domestic demand, particularly in emerging markets, should cushion some of the external drag.
