AMRO cuts PH economic growth outlook for 2025, 2026

The ASEAN+3 Macroeconomic Research Office (AMRO) on Wednesday downgraded its Philippine economic growth projections for both 2025 and 2026, joining a growing list of institutions that have cut expectations.

In its January ASEAN+3 Regional Economic Outlook (AREO), AMRO said it now sees Philippine growth at 5.2% in 2025, down from its previous estimate of 5.6%, and at 5.3% in 2026 from 5.5% earlier.

A number of institutions such as the International Monetary Fund (IMF) have previously slashed their Philippine growth expectations for 2025 and 2026, citing downside risks such as the impact of corruption on infrastructure spending.

The weak infrastructure spend has dragged the country’s economic growth, slumping to 4.0% in the third quarter, the slowest in four years since the 3.8% recorded in the first quarter of 2021 when the country implemented strict lockdowns due to the COVID-19 pandemic. Growth averaged 4% in the first nine months.

The slowdown has been widely attributed to lower government spending, as corruption concerns dampened consumer and investor sentiment, with the Department of Economy, Planning, and Development (DepDev) conceding that the government is unlikely to meet the 5.5% to 6.5% target range.

This comes as Philippine lawmakers are now looking into alleged irregularities in public works spending, after President Ferdinand “Bongbong” Marcos Jr. in August disclosed that 20% of the total P545-billion budget for flood control projects went to only 15 contractors, which he described as a “disturbing assessment.”

Officials earlier last week vowed to ramp up infrastructure spending this year, with the Department of Public Works and Highways (DPWH) targeting to spend P200 billion to P250 billion in the first quarter.

The local picture contrasts with a more upbeat view on the region, as AMRO raised its ASEAN+3 growth forecast to 4.3% for 2025 from 4.1%, and to 4.0% for 2026 from 3.8%. Growth in ASEAN alone is expected at 4.8% in 2025 from 4.6%, and at 4.6% in 2026 from 4.3% previously.

“The ASEAN+3 region has demonstrated notable resilience, navigating global uncertainties more effectively than anticipated,” AMRO chief economist Dong He said.

“Strong technology demand and robust FDI inflows into emerging sectors, including advanced electronics, electric vehicles, and digital services, have helped cushion growth despite ongoing tariff headwinds,” he added.

He noted, however, that uncertainty remains elevated with key concerns such as the US trade policy, the slowdown in technology demand, slower growth in major economies, and heightened financial market volatility.

“While the balance of risks has improved, the external environment remains highly uncertain. In the near term, maintaining policy readiness to respond to emerging shocks is critical,” He said.

“Over the longer term, diversifying growth drivers and deepening regional economic integration will be essential to strengthen the region’s resilience,” he added. —AOL, GMA Integrated News