Insights & blogs
Mar 11, 2025
Economic update
The Philippine economy has maintained its spot as one of the fastest growing economies in the region, bouncing back from the challenges of COVID with a growth rate of 5.7% in 2024 and 5.4% in 1H 2025.
Household consumption continues to be the main engine of the Philippine economy, accounting for 60 to 70% of GDP growth each year. This strong consumption has been fueled by the following:
- Favorable demographics: The country has a young and growing population, which is expected to reach 117 million by 2025.
- Remittances: The amount of remittances sent by OFWs grew by around 3% in 2024 and is equivalent to around 8% of GDP. The number of OFWs deployed abroad has exceeded the pre-pandemic level, with 2.7 million deployed in 2024.
- Unemployment rate at record low: The country’s unemployment rate has declined significantly in the past 2 years, even reaching historic lows. From a 17.6% during the height of the pandemic, the unemployment rate is now around 3% to 4%, below the 5.3% level before COVID.
The Philippine economy is expected to grow by at least 5% in 2025 with household consumption as the biggest driver. Consumer spending is expected to show stronger growth this year with inflation now at manageable levels. This improvement will likely be most apparent in discretionary spending after a period of slower growth caused by high inflation, as consumers focus more on essentials.
Investment spending may also improve in the near term given the anticipated interest rate cuts from the central bank. With inflation now more manageable, the BSP may continue cutting interest rates in the coming months. Inflation is expected to remain within the BSP’s target, assuming no unexpected supply shocks. Upside risks to this outlook include the possibility of adverse weather and disruptions to global supply chains due to trade barriers. Inflation remains sensitive to adverse weather conditions, particularly for vegetable prices, which warrant close attention. On the other hand, stable commodity prices amid China’s economic slowdown and improving rice supply may offset these risks.
Disclosure
The information contained herein is published by the Bank of the Philippine Islands (or the “Unibank”). It is based on information obtained from sources considered to be reliable, but the Unibank does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any purpose. All the charts and graphs are taken from publicly available sources or derived from proprietary data. Expressed opinions may be subject to change without prior notice. Any recommendation contained herein does not pertain to any specific investment objectives, financial situation and the particular needs of any addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgment by addressees who should obtain separate legal or financial advice. The Unibank, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Unibank or any other person has been advised of the possibility thereof. The information herein is not to be construed as a solicitation to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Unibank and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.
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