Domestic growth is projected to accelerate to 4.6 percent in the final quarter of 2025, fueled by easing inflation and a seasonal increase in remittances from overseas Filipinos, according to a capital markets research report.
The December 2025 issue of Market Call, released on Thursday by the University of Asia and the Pacific (UA&P) and the Business Economics Club, said additional drivers of growth from October to December include stronger exports, lower interest rates, and a rebound in government spending.
Employment generation is also expected to improve, supported by heightened demand for goods and services during the Christmas season.
In the third quarter of the year, growth as measured by gross domestic product (GDP) slowed to 4 percent, down from 5.5 percent in the previous quarter and 5.2 percent in the same period last year.
Inflation averaged 1.6 percent in the first 11 months of the year, with November easing to 1.5 percent, unchanged from the previous month. A year earlier, inflation stood at 2.5 percent.
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) reduced its key policy rates by another 25 basis points on Dec. 11, bringing total cuts since August 2024 to 200 basis points.
This lowered the target reverse repurchase (RRP) rate to 4.5 percent, the overnight deposit rate to 4 percent, and the overnight lending rate to 5 percent.
The report noted that the faster projected growth “should encourage stronger consumer spending and boost employment toward year-end.”
It added that “more robust spending and lower current account deficits should drive this, supporting households’ holiday spending alongside an employment recovery.”
The seasonal rise in remittances from overseas Filipino workers (OFWs) is also expected to lift the peso to around the 58.50 level against the US dollar by year-end, although the local currency may weaken in the early part of next year.
PNA PHOTO