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Manila Bulletin devider Business devider The Economy devider Philippine economy to rebound in Q4 but likely miss 2025 growth target, UA&P says

Philippine economy to rebound in Q4 but likely miss 2025 growth target, UA&P says

Published Dec 18, 2025 02:46 pm
The Philippine economy is set to rebound in the final months of 2025 after a worse-than-expected four-percent gross domestic product (GDP) growth in the third quarter, according to the University of Asia and the Pacific (UA&P), although it is still likely to fall short of the government’s target.
According to UA&P’s latest The Market Call report released on Thursday, Dec. 18, the Philippine economy is projected to grow by a faster but still below-target 4.6 percent in the fourth quarter of 2025, supported by lower inflation and interest rates, higher overseas Filipino worker (OFW) remittances and exports, and a rebound in government spending, said UA&P senior economist Victor Abola and economist Marco Antonio Agonia.
Last month, UA&P projected the Philippine economy to grow 5.3 percent year-on-year in the fourth quarter of 2025, with full-year growth expected at 5.1 percent.
To recall, 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 also highlighted that weaker sentiment following the third-quarter GDP slowdown appears to be affecting the final quarter of the year, “with October-to-November economic indicators noticeably soured.”
UA&P’s November and December GDP growth forecasts both fell short of the government’s 2025 growth target of 5.5 to 6.5 percent.
Earlier, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan conceded that the Philippines is likely to miss its 2025 growth goal after a sharp third-quarter slowdown amid a worsening corruption scandal, with even the lower end “very unlikely” to be reached.
The UA&P report also emphasized that employment is expected to rise in the final two months of 2025 to keep pace with higher consumer demand. While the peso may approach the projected ₱58.50 per dollar by year-end, renewed weakness is anticipated as 2026 begins.
It added that bond markets are expected to see increased trading activity after the Bangko Sentral ng Pilipinas (BSP) cut its policy rate by 25 basis points (bps) to 4.5 percent in December.
The report said local stocks are expected to post a modest recovery, supported by Philippine peso-United States (US) dollar rate stabilization and increased holiday spending.
The latest Philippine Statistics Authority (PSA) data showed inflation eased to 1.5 percent in November, bringing the year-to-date average to 1.6 percent for the first 11 months of 2025— below the two- to four-percent target range of manageable annual price increases deemed conducive to economic growth.
Meanwhile, the latest BSP data showed that cash remittances from overseas Filipinos (OFs) climbed to $3.17 billion in October, the highest in three months, boosted by front-loaded holiday spending.
Trade data also remained supportive, with merchandise exports totaling $70.43 billion as of end-October—the highest level for the first 10-month period since 1991, the latest PSA data showed.
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