OECD sees Philippine growing by 5.6 percent this year

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June 4, 2025 | 12:00am

MANILA, Philippines — The Philippine economy is likely to grow by 5.6 percent this year, slightly lower than last year’s 5.7 percent expansion due to an anticipated slowdown in major economies, according to the Organization for Economic Cooperation and Development (OECD).

“Real GDP (gross domestic product) is projected to grow by 5.6 percent in 2025 and six percent in 2026,” the OECD said in the OECD Economic Outlook June 2025 report released yesterday.

If the 2025 growth forecast is realized, it will be slower than last year’s revised 5.7 percent and below the government’s six to eight percent target for this year.

However, the OECD expects the GDP growth to pick up to six percent next year, meeting the lower end of the government’s six to eight percent growth goal.

Economic growth in the first quarter was at 5.4 percent, slightly faster than the previous quarter’s 5.3 percent expansion, but slower than the 5.9 percent growth in the same period last year.

The OECD said Philippine economic growth would be supported by private consumption, which will benefit from a strong labor market and low inflation.

“Inflation is anticipated to remain contained at two percent in 2025 and 3.1 percent in 2026 amid balanced domestic demand and currency stability,” the OECD said.

Overall inflation eased to 1.4 percent in April, the lowest level since April 2019’s 1.2 percent.

The OECD said investments are also expected to pick up modestly amid easing financial conditions and increased public infrastructure spending.

“Monetary policy is expected to continue to ease over 2025 and 2026 to a more neutral stance,” the OECD said.

It said investments could also get a boost from recent reforms to encourage foreign direct investments into the country.

Moreover, it said fiscal policy is expected to be moderately restrictive this year and the next, with a gradual reduction of the fiscal deficit to 4.6 percent in 2026 from 5.7 percent of GDP in 2024.

“On the downside, a larger-than-expected slowdown in major economies, including the United States or China, could reduce demand for Philippine exports and affect remittance inflows, impacting domestic consumption and investment,” the OECD said.

Despite uncertainties in global trade, Department of Economy, Planning and Development Secretary Arsenio Balisacan earlier said that it may be too early to give up on the six to eight percent growth target for the medium-term or from 2025 to 2028.

In the short-term, however, he said it is possible to adjust the upper end of the growth target as uncertainties weigh on the growth outlook.

To achieve the lower end of this year’s growth target, DEPDev Undersecretary Rosemarie Edillon earlier said that the Philippines would need to grow by 6.2 percent in the remaining three quarters.