Philippines economy to grow 5.6% in 2025 – Fitch

MANILA, Philippines — Global debt watcher Fitch Ratings expects the Philippine economy to expand by 5.6 percent in 2025, driven by infrastructure spending, services exports and remittance-fueled private consumption

However, domestic political uncertainty and global trade tensions may temper the country’s growth momentum in the near term. Still, gross domestic product (GDP) is projected to inch up to 5.8 percent in 2026 and six percent in 2027.

In a peer credit analysis released yesterday, Fitch said private demand should be supported by easing inflation and interest rates.

The credit rating agency noted that growth would likely remain broadly in line with the 2023 to 2024 pace, underscoring the economy’s resilience despite recent political noise and external headwinds.

“We expect the Philippines’ economy to expand by 5.6 percent in 2025, broadly in line with 2023 to 2024, fueled by the traditional growth drivers of large public infrastructure investments, services exports and remittance-funded private consumption,” Fitch said.

The rating agency, however, flagged downside risks to investment, citing “domestic political uncertainty,” weaker-than-expected results for President Marcos’ allies in the midterm elections and recent corruption scandals.

Fitch also warned that “global trade tensions will likely drag on growth, in particular indirectly through weaker global demand.”

Earlier in April, Fitch retained the country’s BBB credit rating with a stable outlook, reflecting the Philippines’ strong medium-term growth and gradual fiscal consolidation.

The BBB rating is supported by a large and diversified economy and a manageable government debt burden, although it remains constrained by “low GDP per head” and “weaker governance standards” compared to peers.

The debt watcher also said that the government’s medium-term fiscal program, updated in June, relaxed its revenue mobilization targets but still points to a gradual reduction in the debt ratio over time.

“We still expect a gradual downward path for government debt/GDP over the medium term, given strong nominal GDP growth,” Fitch said.

The credit rater said that policy responses to the weaker global demand and uncertainty would be key toward easing the impact of headwinds on sovereign credit profiles. But it noted that “recent violent protests in some countries such as Nepal, Indonesia and the Philippines, could add to spending pressure.”

It projected the national government’s debt-to-GDP ratio to decline to 54.9 percent by 2027, while the fiscal deficit is seen narrowing to 3.8 percent from 4.6 percent in 2024.

Fitch also expects the current account deficit to improve to three percent of GDP by 2027 from 3.8 percent in 2024 amid stronger exports and remittances.

Among the key risks to the outlook are failure to maintain fiscal stability, weaker adherence to economic reforms and deterioration in the country’s external position.

Conversely, stronger fiscal performance and faster growth could support further convergence of per-capita income toward that of peer economies.