Targeted policies aimed at tackling climate change and managing the risks and opportunities posed by artificial intelligence (AI) could help sustain the Philippines’ economic momentum following a growth slowdown in the third quarter of 2025, according to an economist on Wednesday.
Speaking during an online briefing, Dong He, chief economist at the ASEAN+3 Macroeconomic Research Office (AMRO), said the Philippine economy continues to expand steadily, though it has not yet fully recovered the growth pace seen before the pandemic.
Economic output, as measured by gross domestic product (GDP), expanded by 4 percent in the third quarter of 2025, a marked deceleration from 5.5 percent in the preceding quarter and 5.2 percent during the same period a year earlier. The weaker performance was attributed in part to adverse weather conditions as well as a decline in government spending linked to corruption-related issues surrounding flood control projects.
In response to these developments, AMRO revised its growth outlook downward, lowering its 2025 forecast for the Philippines to 5.2 percent from an earlier estimate of 5.6 percent. The 2026 projection was also trimmed to 5.3 percent from 5.5 percent.
Dong said the latest figures highlight the need for additional policy action to enhance climate resilience and ensure the economy can effectively adapt to rapid advances in AI, noting that overall growth capacity has yet to return to pre-pandemic levels.
He added that maintaining a robust policy framework and clearly prioritizing public spending would be critical in supporting economic expansion, rebuilding investor confidence and stimulating greater private-sector investment.
“Private consumption has been quite firm, and we continue to believe that private consumption will remain firm,” he said.
Given the Philippines’ prominent position in the global business process outsourcing (BPO) industry, Dong emphasized the importance of investing in human capital so the workforce can benefit from AI adoption while limiting potential job displacement.
“All these require strong public investment or public private partnerships, and that requires very strong policy frameworks, prioritized spending plans and targeted projects that would strengthen the economy’s capacity. And that would end up in higher public and the private investments,” he said.
PNA PHOTO