Despite the headwinds posed by US fiscal policies under the upcoming Trump administration and the impact of a stronger dollar, the Philippine economy will remain driven by domestic consumption, strong household balance sheets, and prudent monetary policies, lender BDO Unibank Inc. said in a statement yesterday.
The bank is confident that the Philippines is poised for accelerated growth, as it stands out as. “a global out performer,” Tinga said during a recent business forum exclusively for BDO’s Japanese clients.
A stronger dollar could make imports costlier and weigh on the peso, Tinga noted.
He underscored the role of the country’s young, growing population and strong consumer spending in driving economic performance, showcasing the Philippines’ capacity to sustain growth amid global uncertainties.
”With half of its citizens aged 25 or younger and an annual population growth rate of 1.6 percent, domestic consumption has remained strong,” the bank executive said.
Household spending has surpassed pre-pandemic levels, fueled by a resurgence in overseas labor deployment, which also exceeds pre-pandemic numbers, and a steady flow of remittances from abroad.
”These inflows continue to strengthen the purchasing power of Filipino families, driving consumption-led growth,” Tinga emphasized.
Inflation has returned to the Banko Sentral ng Philipinas’ (BSP) target range, which opens the door for potential monetary easing. Stabilized rice prices, supported by government measures such as reduced import tariffs.
The central bank is expected to lower interest rates, creating a favorable environment for business investments and improve consumer confidence, Tinga said.
Lower rates are expected to reinvigorate private sector investments, boost business sentiment, and potentially accelerate the Philippine economy to its pre-pandemic growth trajectory, against the backdrop of easing monetary policies globally.
While the Philippines excels in services exports and benefits from significant remittance inflows, there is an urgent need to upskill the workforce to stay competitive in an increasingly digital global economy,” he added Tinga said.
“Private capital expenditures remain subdued due to previously high interest rates, but with inflation now under control and rates set to decline, the outlook for private sector investment is improving,” he said.
