The domestic economy is expected to recover by the second half of 2026 after being weighed down by lower government infrastructure spending and weaker investor confidence following corruption issues.
During the weekly meeting of journalists and press relations practitioners in Mandaluyong City on Tuesday, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said gross domestic product (GDP) growth is projected at around 4.5 percent in 2025, below the Development Budget Coordination Committee’s 5.5 to 6.5-percent target.
Economic growth slowed to 4 percent in the third quarter of 2025 from 5.49 percent in the previous quarter, bringing the end-September expansion to 5 percent.
Remolona expects the economy to grow by 5.4 percent this year and about 6.2 percent next year, citing a likely return of investor confidence.
He said the government is using the corruption crisis as an opportunity to push for prosecution, restitution and systemic reforms.
“This is an opportunity, I think, to reform the system,” he said.
Among the key reforms cited were simplifying the tax system to reduce reassessments by the Bureau of Internal Revenue and maintaining tax effort at 15 percent of GDP.
He added that the banking system remains strong and well-funded, supporting domestic activity.
Remolona also said the BSP is nearing the end of its easing cycle as inflation remains manageable, ruling out a rate hike.
“We’re very close to where we want to be in terms of the policy rates,” he said. “For now, it’s either we don’t move or we cut.”
He noted that one more policy rate cut is possible this year depending on incoming data, particularly if growth falls below projections.