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Manila Bulletin devider Business devider The Economy devider Softer inflation to lift Philippine GDP through 2027, but growth may stay at target's low end—BSP

Softer inflation to lift Philippine GDP through 2027, but growth may stay at target's low end—BSP

Published May 15, 2025 02:26 pm
Slowing increases in consumer prices could boost the Philippine economy this year through 2027, with gross domestic product (GDP) growth falling within the lower end of the government’s target of six to eight percent, according to the Bangko Sentral ng Pilipinas (BSP).
“GDP growth could settle close to the low end of the government’s growth targets for 2025 to 2027,” the central bank said in a report released on Thursday, May 15.
“Domestic economic activity may benefit from disinflation but faces downside risks,” it noted.
The country’s inflation eased to a five-year low of 1.4 percent in April, according to the Philippine Statistics Authority (PSA).
April’s figure fell significantly below the government’s target band of two to four percent, but within the Bangko Sentral ng Pilipinas’ (BSP) forecast range of 1.3 percent to 2.1 percent. Last month’s figure brought the average rate for the first four months to two percent.
GDP growth, meanwhile, accelerated by 5.4 percent in the first quarter of 2025, slightly faster than the 5.3 percent in the last quarter of 2024. However, it was far slower than the 5.9-percent growth seen in the same period last year.
“BSP staff estimates suggest slightly lower growth forecasts for 2025 relative to the previous forecast round in February,” it said.
It explained that the downward revision could be attributed to the “higher real policy rate, which outweighed the impact of the decline in oil prices.”
Real policy rate refers to the key borrowing costs adjusted for inflation. The central bank decided to resume the easing cycle when it trimmed the policy rate by 25 basis points (bps) to 5.5 percent, from 5.75 percent, on April 10. This was attributed to “a more manageable inflation outlook and increased risks to growth.”
Global oil prices went down in the past two months because of worries that demand might slow due to unclear tariff policies. Among the major trade moves was United States (US) President Donald Trump’s imposition of reciprocal tariffs across all the economic giant’s trading partners, including the Philippines.
Tariff rate negotiations are now ongoing as the three-month pause is set to expire by the end of June.

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Bangko Sentral ng Pilipinas (BSP) inflation rate interest rates gross domestic product (GDP) growth
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