S&P, AMRO cut growth forecasts

S&P GLOBAL RATINGS and the ASEAN+3 Macroeconomic Research Office (AMRO) slashed its Philippine growth projections this year and in 2026, following the slower-thanexpected growth in the third quarter.

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In a report dated Nov. 23, S&P Global cut its Philippine gross domestic product (GDP) growth projection to 4.8% this year from its earlier projection of 5.6%, below the government's 5.5-6.5% target. This is slightly higher than S&P's projected 4.6% average growth for Asia-Pacific this year.

At the same time, AMRO in its latest Annual Consultation Report lowered its GDP growth forecast for the Philippines to 5.2% this year from 5.6% previously.

If S&P and AMRO's forecasts materialize, the Philippine economy would grow much slower than the 5.7% in 2024.

"Third-quarter growth was much lower than the pace that the Philippines usually grows at, which naturally pulls down our forecast for the year overall," Vincent Conti, senior lead economist at S&P Global Ratings, said in an e-mail.

In the third quarter, the Philippine economy expanded at its slowest pace in over four years at 4%, amid a slump in state spending and consumption due to the corruption scandal. This brought the nine-month GDP growth to 5%.

Allegations of widespread corruption in public works projects have sparked outrage and protests, and dampened investor and consumer confidence.

"Private investment and exports face headwinds from external uncertainties due to the US tariff policy, while public investment will be dampened by the flood control project controversies," AMRO said.

Mr. Conti also noted weaker public investment has dragged the country's economic output this year.

"Investment, especially by the public sector, has been the main driver of the slowdown. This has also been spilling over into consumer confidence," he said.

AMRO, however, said household consumption, which accounts for over 70% of the economy, is expected to grow steadily.

"The near-term macroeconomic and financial outlook remains stable, underpinned by firm domestic demand and solid financial soundness indicators," it said.