While private consumption sparks a ray of light in the dimming economy, persistent domestic governance concerns in flood control projects, recent destructive typhoons, and United States (US) tariffs are blocking a brighter trend.

As such, Singapore-based DBS Bank Ltd. has adjusted downward its full-year 2025 gross domestic product (GDP) growth forecast for the Philippines from 5.3 percent previously to 4.7 percent, matching the Department of Finance’s (DOF) lowered expectation.

“As it stands, growth was expected to moderate in the rest of 2025 and next year due to a confluence of domestic and external headwinds, including the impact of typhoons, domestic governance issues (corruption issues from flood control projects), slower fiscal expenditure, and the impact of US tariffs,” read DBS Group Research’s report published on Nov. 18.

From muted growth this year, DBS anticipates economic expansion to crawl at five percent in 2026 through 2027—both of which fall extremely hard below the existing yearly target of six to seven percent until 2028.

“Consumption demand should make up for part of the downside, with real purchasing power benefiting from softer inflation, a low unemployment rate, and loose financial conditions,” the report read.

To recall, consumer price movements were steady at 1.7 percent in both October and the first 10 months, falling comfortably within the government’s medium-term target band of two to four percent.

The jobless rate as of September inched up to 3.8 percent from 3.7 percent in the same month last year. This translates to 1.96 million unemployed Filipinos, higher than last year’s 1.89 million.

Despite partial support from robust consumption, DBS said “part of the buoyancy will be hurt by sporadic typhoons that hurt farm output and weaker sentiment on the corruption scandals.”

To date, the GDP growth goal for 2025 remains unchanged at 5.5 to 6.5 percent, a pace that Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan conceded is nearly impossible to achieve. He had said GDP needs to expand by at least 6.8 percent in the fourth quarter to hit at least 5.5-percent growth.

Balisacan earlier said the Cabinet-level Development Budget Coordination Committee (DBCC) is expected to convene next week to revisit the country’s macroeconomic targets following the worse-than-expected economic growth performance in the third quarter at four percent—the weakest in four-and-a-half years.

“Speedy resolution to the lingering trouble facing past flood projects are a few potential offsets to the otherwise somber outlook,” DBS noted.

These efforts could help buck the slowing economy, supported by renewed local and foreign interest in renewable energy (RE) projects, improved brick-and-mortar foreign direct investment (FDI) inflows, and steady remittances.

It can be recalled that the Bangko Sentral ng Pilipinas (BSP) has been sounding dovish since its latest easing in October. On Tuesday, Nov. 18, BSP Governor Eli M. Remolona Jr. said further monetary policy easing is “possible” next month.

DBS said these dovish signals could “weigh on the peso, with foreign exchange (forex) intervention likely to be the first line of defense to prevent a weaker currency from adding to inflationary risks.”

It expects that another interest rate reduction is likely in December and two more in the first semester of 2026. Assuming these will all be quarter-point cuts, the key borrowing cost could fall to four percent before the middle of next year.

DBS said external conditions also support this pace and magnitude because the US Federal Reserve is expected to resume easing, which helps maintain the gap between Philippine and US interest rates.