Philippine economy facing slower growth path—DLSU economists
Published Jan 20, 2026 03:02 pm
The De La Salle University (DLSU) economists have revised downward their growth projections for the Philippine economy for this year and next year, saying the deceleration comes after a worse-than-expected four percent slowdown in the third quarter of 2025.
According to the DLSU report of the Philippine economy for January 2026, published this week, the economists tweaked downward their gross domestic product (GDP) growth projections for the country to 4.5 percent in 2026 and 5.6 percent in 2027, from their December 2025 forecasts of 4.8 percent and 5.9 percent, respectively.
The report, authored by DLSU economists Jesus Felipe, Mariel Monica Sauler, Gerome Vedeja, and Seth Paolo Paden, meanwhile kept their fourth-quarter and full-year 2025 growth projections unchanged from the December forecast– still falling short of the government’s lower target of 5.5 percent.
“We maintain our December 2025 growth forecast and overall analysis of the Philippine economy. While we anticipate a slight uptick in quarter four 2025 to 4.4 percent, full-year growth for 2025 is expected to settle at 4.8 percent,” they said.
The country’s chief economist already conceded last year that even the lower end of the 2025 growth target is out of reach, noting that achieving at least five percent for the full year would still make the Philippines one of the fastest-growing economies in Asia. GDP performance during the fourth quarter and full-year 2025 will be reported on Jan. 29.
“Some policymakers have already acknowledged that economic growth may fall closer to the 4.8 percent to five percent range in 2025, and the interagency Development Budget Coordination Committee (DBCC) has reduced the growth target for 2026 to five to six percent,” the DLSU economists noted.
National Socioeconomic Planner Arsenio M. Baliscan earlier announced that the Cabinet-level, interagency DBCC had revised the country’s GDP growth targets downward, projecting five to six percent for 2026, 5.5 to 6.5 percent for 2027, and six to seven percent for 2028.
If DLSU economists' projections for 2026 and 2027 are realized, growth would still fall short of the government’s downgraded targets for those years.
Meanwhile, the report noted that inflation in 2025 averaged 1.66 percent, slightly below the projected 1.68 percent, which still falls below the government’s target range of two to four percent.
The average unemployment rate in the Philippines for 2025 is forecasted at 4.15 percent. Employment in the Agriculture, Fisheries, and Forestry (AFF) and services sector are expected to rise by 1.43 percent from 2024, while average employment in the industry sector is projected to grow by 1.62 percent over the same period.
According to the latest data from the Philippine Statistics Authority (PSA), the country’s unemployment rate fell to 4.4 percent in November from five percent in October, as the labor market showed signs of resilience despite typhoon disruptions. The number of unemployed dropped to 2.25 million from 2.54 million, though it remains higher than the 1.66 million recorded a year ago.
The report further projected that merchandise imports and exports for 2025 would rise by 5.07 percent and 14.57 percent, respectively. For 2026, imports are expected to increase by 15.9 percent, while exports are forecasted to grow 1.59 percent.
The report added that the peso/dollar exchange rate edged up to 58.81 in December 2025 from 58.79 in November. It is expected to rise slightly to 58.9 in the following month, with the average rate for 2025 recorded at 57.6.
On the overall economic outlook, the report described a mixed picture. It noted that the “Philippine economic outlook for 2025 is characterized by a stark divergence between external resilience and domestic retrenchment,” noting that while the services sector and export performance provide a critical buffer against a deeper downturn, overall growth is being constrained by a sharp decline in capital formation and only moderate private consumption.
The report further observed that the domestic private sector is weighed down by caution and fiscal bottlenecks linked to governance. While some signs of recovery are expected by 2027, the near-term outlook calls for recalibrated expectations and targeted economic policies to address the Philippines’ structural weaknesses.