The Philippine economy is projected to grow by a faster 5.3 percent year-on-year in the fourth quarter of 2025, driven by the resumption of government spending and stronger consumer activity fueled by healthy remittance inflows during the holiday season, the University of Asia and the Pacific (UA&P) said.

According to the UA&P’s “The Market Call” report for November, full-year economic growth is projected at 5.1 percent for 2025, below the government’s target of 5.5 to 6.5 percent for this year.

“We expect fourth-quarter gross domestic product (GDP) growth to improve to 5.3 percent, thus fiscal year (FY) 2025 growth at 5.1 percent, as the national government (NG) resumes its spending and consumers use healthy remittance inflows to get into the holiday groove,” UA&P senior economist Victor Abola and economist Marco Antonio Agonia said.

Third-quarter GDP growth fell to a 4.5-year low of four percent, as government spending on public goods and services was tempered in the aftermath of the flood control corruption scandal. The end-September growth rate averaged five percent.

The report nonetheless noted that President Ferdinand R. Marcos Jr. recently assured the public of a conviction in the flood control scandal, a move the UA&P economists said “could boost confidence.”

For inflation, the economists projected it to hold at 1.7 percent through the end of the year before rising to 2.2 percent in 2026.

“Consumer confidence index (CCI) for the fourth quarter of 2025 and next 12 months, as surveyed by the Bangko Sentral ng Pilipinas (BSP) in late third quarter, supports this as CCI emerged strongly higher than for the third quarter,” the report added.

It noted that remittances grew 3.8 percent year-on-year in September and remittance growth accelerated year-to-date to 3.2 percent, providing more pesos for consumer spending.

The report also added that slower economic growth could pave the way for a BSP rate cut in December, while the United States (US) dollar-peso exchange rate is expected to remain around ₱58.5:$1 amid increased holiday season activity.

“Local bonds remain attractive with high real yields, likely BSP rate cuts in December, and more in 2026. Equities remain subdued but may have a typical minor recovery as the year ends and the BSP cuts rates. Nonetheless, we think high dividend yield counters and REITs [real estate investment trusts] may offer good returns to investors,” the report said.

Last week, Abola told reporters that the country’s economic growth rate is expected to reach 5.3 percent in 2026, below the government’s six- to seven-percent goal for next year.