Manila: The Philippine economy is anticipated to achieve one of the highest growth rates within the Association of Southeast Asian Nations (ASEAN) this year, according to HSBC Global Private Banking and the Bank of America (BofA).

According to Philippines News Agency, in a report released on Tuesday, James Cheo, the chief investment officer for Southeast Asia and India at HSBC Global Private Banking and Wealth, stated that the Philippine economy is expected to deliver robust growth. This growth is attributed to strong domestic consumption, a thriving business process outsourcing (BPO) sector, and increasing investments in digital services.

Cheo highlighted that household consumption is projected to return to pre-pandemic levels, aided by easing inflation, a strong labor market, and increased infrastructure spending. The country’s strength in services exports, particularly in information technology and BPO services, is seen as a buffer against global trade uncertainties and tariff risks.

He noted that services exports and overseas remittances remain crucial economic pillars, significantly contributing to the Philippines’ economic resilience and stability. Monetary and fiscal policies are aligned to support growth while managing risks. The Bangko Sentral ng Pilipinas is expected to reduce the policy rate to 5 percent in the third quarter of this year, cautiously navigating external risks such as potential volatility in the peso and the US Federal Reserve’s easing cycle.

Cheo also mentioned that the government’s infrastructure agenda continues to drive growth, supported by revenue-enhancing measures. Despite potential volatility from a stronger dollar, the peso is expected to remain resilient with a forecast of 59.8 against the USD by the end of 2025.

In a separate report, BofA revised its Philippine economic growth forecast upward to 5.9 percent this year from the previous 5.5 percent projection. Among the ASEAN-6, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam, the Philippines’ economic projection is the second highest, following Vietnam’s 6.8 percent forecast.

According to BofA, the domestic-oriented nature of the Philippines makes it “less vulnerable” to potential higher tariffs that could be imposed by the United States. Additionally, BofA projects that headline inflation will remain within the government’s target of 2 percent to 4 percent.