The Philippines will buck the downward trend and lead economic growth acceleration among emerging markets in 2025, according to the London-based think tank Capital Economics.
A Feb. 20 report of Capital Economics assistant economist Lily Millard showed that among emerging markets that are forecasted to post faster gross domestic product (GDP) expansion this year than last year's, the Philippines' projected six percent for 2025 is the highest, outpacing those of Saudi Arabia, Thailand, Colombia, South Africa, Romania, Czechia, and Hungary.
In contrast, Capital Economics expects 2025 GDP growth to slow compared to 2024 rates in India, Indonesia, China, Malaysia, Taiwan, Brazil, Poland, and Turkey.
"We think growth will be weaker this year than in 2024 in much of Asia. Growth will accelerate in emerging Europe, albeit remaining at low rates," the think tank said.
In particular, Capital Economics cautioned that if US President Donald J. Trump's plan to slap reciprocal tariffs pushes through, "it is likely that India, Turkey, and Brazil would suffer the largest loss of competitiveness" as they have the biggest gap in bilateral tariffs with America.
The think tank's 2025 GDP growth forecast for the Philippines is at the lower end of the government's six- to eight-percent goal.
But full-year economic expansion averaging 5.6 percent in 2024 fell below expectations and the targeted six to 6.5 percent.
Still, Capital Economics data showed that the Philippines' GDP increased the fastest quarter-on-quarter during the final three months of last year.
During the October-to-December 2024 period, GDP rose 1.8 percent from the July-to-September output level, above the 1.5 percent quarter-on-quarter growth during the third quarter.
"At the country level, economies in Asia continued to outperform other emerging markets last quarter," Capital Economics noted.
While Philippine exports have been declining in the past quarter, expectations of lower domestic inflation and interest rates would support robust economic growth this year.
Across emerging Asia, in general, "wage and price pressures are far weaker" than in Eastern Europe and Latin America, where inflation is expected to remain above central banks' targets, according to Capital Economics.
Even as the Bangko Sentral ng Pilipinas (BSP) has paused from its rate cuts, the think tank said that "Asian central banks will lead emerging markets' easing cycle this year."
Capital Economics is sticking with its view that the BSP would cut the policy rate by total of 100 basis points (bps) in 2025, slashing it from the current 5.75 percent to 4.75 percent by yearend.
Based on Capital Economics data, the Philippine peso strengthened a bit against the US dollar since Nov. 5, 2024, when Trump won the US presidential election.
The peso bucked the trend, as "most emerging market currencies have weakened against the dollar since President Trump was elected," the think tank noted.
Besides the peso, the currencies of Russia, Colombia, Peru, Brazil, and Chile appreciated versus the greenback these past three months.
"Higher US Treasury yields and a stronger dollar are likely in Trump's presidency. The good news is that emerging markets' currency crisis risks are nearing a historic low," Capital Economics said.
The peso has a very low risk, estimated at below 0.1 in Capital Economics' Emerging Market Currency Crisis Risk Indicator, where a score of 0.5 and above puts the currency at high risk.
However, Capital Economics earlier projected the peso to slide to record-low levels of 62:$1 by end-2025.