Manila: Philippine economic growth is expected to improve next year backed by public investment spending, Nomura Global Markets Research said. In its Asia Macro Outlook 2025 report released on Wednesday, Nomura said Philippine economic growth is projected to hit 6.0 percent in 2025 from 5.6 percent this year.
According to Philippines News Agency, Nomura stated that public investment spending will remain a significant growth engine, as the government advances infrastructure projects, which are a top priority for the Marcos administration. This momentum is expected to gain further traction from the mid-term elections on 12 May 2025. The sustained implementation of infrastructure is anticipated to attract private investment spending as borrowing costs decline and the Bangko Sentral ng Pilipinas (BSP) eases monetary policy.
Nomura highlighted that easing inflation, alongside positive wage growth, will support household spending. The low inflation environment is also expected to provide the BSP with the opportun
ity to further ease policy rates. The central bank has already reduced key interest rates by a total of 50 basis points this year.
“We expect BSP to cut its policy rate by an additional 100bp in this cycle (25bp each in December and in the first three monetary board meetings of 2025). As was clear in BSP’s guidance in its last two decisions, the next moves will largely be driven by the 2025 and 2026 inflation outlooks rather than data for the rest of 2024,” Nomura explained.
The forecast for headline inflation is set to reach 2.7 percent in 2025 and 3.0 percent in 2026, which falls within the BSP’s target range of 2 to 4 percent. This projection is supported by government supply-side measures, lower oil price assumptions, and stable core inflation. In addition to policy rate cuts, Nomura predicts a further reduction of 200 basis points in banks’ reserve requirement ratio (RRR) by mid-2025.
Nomura also identified risks to the country’s growth outlook, including potential weaker global growth and increased g
lobal trade protectionism. “Escalating geopolitical tensions, particularly in the South China Sea, could also generate more growth headwinds. A resurgence in oil prices and renewed supply shocks on food prices could push headline inflation higher, limiting monetary easing,” Nomura warned.
