Fitch: Political uncertainty may stall Philippine growth

Philippine economic growth is expected to remain within target this year, although global trade woes and domestic political uncertainty may cloud the outlook, Fitch Ratings said.

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Visitors browse locally made products on display at the National Arts and Crafts Fair in a mall in Mandaluyong City, Oct. 26.

(PHILIPPINE STAR)

“We expect the Philippines’ economy to expand by 5.6% in 2025, broadly in line with 2023-2024, fueled by the traditional growth drivers of large public infrastructure investments, services exports and remittance-funded private consumption,” Fitch Ratings said in a peer credit analysis released Monday.

The credit rater maintained its Philippine gross domestic product (GDP) projection at 5.6% for this year, within the government’s 5.5-6.5% target.

“Private demand should be supported by easing inflation and interest rates,” Fitch added.

Headline inflation picked up to 1.7% in September, faster than the 1.5% in August but slower than the 1.9% clip a year ago. This brought the year-to-date inflation to 1.7%, matching the Bangko Sentral ng Pilipinas’ (BSP) full-year forecast.

Earlier this month, the BSP trimmed its key policy rate by 25 basis points (bps) to a three-year low of 4.75%. It has so far reduced borrowing costs by a total of 175 bps since August last year.

“However, domestic political uncertainty could affect investment, with allies of President Ferdinand Marcos doing worse than we expected in the recent midterm elections and a recent corruption scandal,” Fitch said.