PH among Southeast Asia’s fastest-growing economies

The Philippine economy is poised to remain one of the fastest-growing in Southeast Asia this year, driven by robust domestic consumption and investment, according to Moody’s Analytics.

In a virtual briefing on Wednesday, economist Sarah Tan said the Philippines continues to outperform many of its regional peers, thanks largely to the strength of its private sector.

“I think the Philippines kind of stands out as one of the fastest-growing economies in Southeast Asia. And really, a lot of that is coming from the strength of its domestic economy, given that it's highly reliant on private consumption,” said Tan.

Moody’s Analytics projects the Philippine economy to grow by 5.9 percent in 2025, an improvement from the 5.6 percent expansion recorded last year. The forecast, while slightly below the government’s 6 to 7 percent target, represents what would be the strongest annual growth in three years.

Tan emphasized that private consumption and investment will continue to fuel the country’s economic momentum, supported by easing inflation and a more accommodative monetary policy stance.

Inflation is expected to moderate to 2.8 percent in 2025 and 3 percent in 2026, remaining within the Bangko Sentral ng Pilipinas’ (BSP) official target range of 2 to 4 percent.

“The BSP faces a tough balancing act to maintain price stability and economic growth,” Tan noted. “Progress on the inflation front supports the case for more rate cuts.”

However, Moody’s Analytics expects the central bank to proceed cautiously, with the policy rate seen declining by 50 basis points to 5.25 percent by year-end to prevent excessive peso volatility, particularly amid global uncertainty.

Tan warned that the key downside risks remain external, particularly the threat of new US tariffs and a potential slowdown in global interest rate normalization, which could dampen demand for Philippine exports.

“Those risks could weigh on industrial producers and exporters, even as the domestic side of the economy remains resilient,” she added.

Despite these challenges, the Philippines’ solid macroeconomic fundamentals and vibrant consumer sector continue to underpin its status as a top performer in the ASEAN region.