Domestic growth is expected to accelerate to 4.6 percent in the last quarter of 2025, driven by lower inflation and a seasonal uptick in remittances from overseas Filipinos, a capital markets research showed.
According to the December 2025 issue of the Market Call, a joint publication of the University of Asia and the Pacific (UA&P) and the Business Economics Club, other contributors to the forecast growth from October to December this year are higher exports, lower interest rates, and a recovery in government spending.
Job creation is also expected to rise, given the higher demand for goods and services during the Christmas season.
In the third quarter this year, growth, as measured by gross domestic product (GDP), slowed to 4 percent from quarter-ago’s 5.5 percent and year-ago’s 5.2 percent.
The rate of price increases averaged 1.6 percent in the first 11 months of this year, with the November level decelerating to 1.5 percent from the month-ago level of 1.5 percent. Year-ago level stood at 2.5 percent.
Also, key rates of the Bangko Sentral ng Pilipinas (BSP) were again reduced by 25 basis points last Dec. 11, resulting in a total of 200 basis points cut since August 2024.
This brought the target reverse repurchase rate (RRP) to 4.5 percent, the overnight deposit rate to 4 percent, and the overnight lending rate to 5 percent.
The projected faster growth rate, the report said, “should encourage stronger consumer spending and boost employment toward year-end.”
“More robust spending and lower current account deficits should drive this, supporting households’ holiday spending along with an employment recovery,” it said.
Relatively, the seasonal surge in remittances from overseas Filipino workers (OFWs) is projected to lift the peso to the 58.50 level against the US dollar by year-end, but the local currency is seen to weaken in the early part of next year.
As of the end of November, the local unit ended at 58.83 to a US dollar. On Thursday, it closed at 58.55 to a greenback.PNA
